GlycoMimetics Inc
Annual Report 2017

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Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017Commission file number 001-36177GlycoMimetics, Inc.(Exact name of Registrant as specified in its charter) Delaware06-1686563(State or other jurisdiction ofincorporation or organization)(IRS EmployerIdentification No.) 9708 Medical Center DriveRockville, Maryland20850(Address of principal executive offices)(Zip Code) Registrant’s telephone number, including area code: (240) 243-1201Securities registered pursuant to Section 12(b) of the Act: Title of Each Class:Name of Each Exchange on which RegisteredCommon Stock, $0.001 par valueThe Nasdaq Stock Market Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No ☒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 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ☒ No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required 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 thebest of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K. ☒Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company oremerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” inRule 12b-2 of the Exchange Act. Large accelerated filerAccelerated filer☒Non-accelerated filer (Do not check if a smaller reporting company)Smaller reporting company Emerging growth company☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒As of June 30, 2017, the last business day of the registrant’s last completed second quarter, the aggregate market value of the Common Stock held bynon-affiliates of the registrant was approximately $262.5 million based on the closing price of the registrant’s Common Stock, as reported by the NasdaqGlobal Market, on such date.At February 28, 2018, 34,359,799 shares of GlycoMimetics, Inc.’s Common Stock, $0.001 par value per share, were outstanding. DOCUMENTS INCORPORATED BY REFERENCEPortions of GlycoMimetics, Inc.’s definitive proxy statement, to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, for its 2018Annual Meeting of Stockholders are incorporated by reference in Part III of this Form 10-K. Table of ContentsSPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K, or this Annual Report, contains forward-looking statements within the meaning ofSection 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended,or the Exchange Act, that involve substantial risks and uncertainties. The forward-looking statements are containedprincipally in Part I, Item 1. “Business,” Part I, Item 1A. “Risk Factors,” and Part II, Item 7. “Management’s Discussion andAnalysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this Annual Report. In somecases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,”“expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue” and“ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future.These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levelsof activity, performance or achievements to be materially different from the information expressed or implied by theseforward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statementcontained in this Annual Report, we caution you that these statements are based on a combination of facts and factorscurrently known by us and our expectations of the future, about which we cannot be certain. Forward-looking statementsinclude statements about:·our plans to develop and commercialize our glycomimetic drug candidates;·our ongoing and planned clinical trials for our drug candidates GMI-1271 and GMI-1359, including the timing ofinitiation of and enrollment in the trials, the timing of availability of data from the trials and the anticipated resultsof the trials;·our ability to achieve anticipated milestones and potential royalties under our collaboration with Pfizer for ourdrug candidate rivipansel and the timing and results of the ongoing Phase 3 clinical trial of rivipansel;·the timing of and our ability to obtain and maintain regulatory approvals for our drug candidates;·the clinical utility of our drug candidates;·our commercialization, marketing and manufacturing capabilities and strategy;·our intellectual property position;·our ability to identify additional drug candidates with significant commercial potential that are consistent with ourcommercial objectives;·our estimates regarding future revenues, expenses and needs for additional financing; and·our beliefs about our capital expenditure requirements and that our capital resources will be sufficient to meet ouranticipated cash requirements through the end of 2019.You should refer to Item 1A. “Risk Factors” section of this Annual Report for a discussion of important factors that maycause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result ofthese factors, we cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate.Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of thesignificant uncertainties in these forward-looking statements, you should not regard these statements as a representation orwarranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Weundertake no obligation to publicly update any forward-looking statements, whether as a result of new information, futureevents or otherwise, except as required by law. You should, therefore, not rely on these forward-looking statements asrepresenting our views as of any date subsequent to the date of this Annual Report. Table of ContentsTABLE OF CONTENTS PagePART I 1 ITEM 1.BUSINESS1 ITEM 1A.RISK FACTORS28 ITEM 1B.UNRESOLVED STAFF COMMENTS56 ITEM 2.PROPERTIES56 ITEM 3.LEGAL PROCEEDINGS56 ITEM 4.MINE SAFETY DISCLOSURES56PART II 57 ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITY SECURITIES57 ITEM 6.SELECTED FINANCIAL DATA59 ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS60 ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK76 ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA76 ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE76 ITEM 9A.CONTROLS AND PROCEDURES76 ITEM 9B.OTHER INFORMATION77PART III 78 ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE78 ITEM 11.EXECUTIVE COMPENSATION78 ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDER MATTERS78 ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE78 ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES78PART IV 79 ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES79 ITEM 16.FORM 10-K SUMMARY82SIGNATURES 83 i Table of Contents PART I ITEM 1.BUSINESS OverviewWe are a clinical stage biotechnology company focused on the discovery and development of novel glycomimeticdrugs to address unmet medical needs resulting from diseases in which carbohydrate biology plays a key role. Glycomimeticsare molecules that mimic the structure of carbohydrates involved in important biological processes. Using our expertise incarbohydrate chemistry and knowledge of carbohydrate biology, we are developing a pipeline of proprietary glycomimeticsdesigned to inhibit disease-related functions of carbohydrates, such as the roles they play in inflammation, cancer andinfection. We believe this represents an innovative approach to drug discovery to treat a wide range of diseases.We are focusing our initial efforts on drug candidates for rare diseases that we believe will qualify for orphan drugdesignation. Our first drug candidate, rivipansel, is being developed for the treatment of vaso-occlusive crisis, or VOC, adebilitating and painful condition that occurs periodically throughout the life of a person with sickle cell disease, or SCD.We have entered into a collaboration with Pfizer Inc., or Pfizer, for the further development and potential commercializationof rivipansel worldwide. Rivipansel has received fast track designation from the U.S. Food and Drug Administration, or FDA,as well as orphan drug designation from the FDA in the United States and from the European Medicines Agency, or EMA, inthe European Union, or EU. We believe the clinical progress of rivipansel provides evidence of the significant potential ofour lead program and our proprietary glycomimetics platform. Building on our experience with rivipansel, we are developingour second most advanced drug candidate, GMI-1271, to be used in combination with chemotherapy to treat either acutemyeloid leukemia, or AML, or multiple myeloma, or MM, both of which are life-threatening hematologic cancers, andpotentially other hematologic cancers as well. We are also developing a third drug candidate, GMI-1359, which is beingevaluated in an ongoing Phase 1 clinical trial in healthy volunteers.Our proprietary glycomimetics platform is based on our expertise in carbohydrate chemistry and our understanding ofthe role carbohydrates play in key biological processes. Most human proteins are modified by the addition of complexcarbohydrates to the surface of the proteins. The addition of these carbohydrate structures affects the functions of theseproteins and their interactions with other molecules. Our initial research and development efforts have focused on drugcandidates targeting selectins, which are proteins that serve as adhesion molecules and bind to carbohydrates that areinvolved in the inflammatory component and progression of a wide range of diseases, including hematologic disorders,cancer and cardiovascular disease. For example, we believe that members of the selectin family play a key role in the onsetand progression of VOC and also in tumor metastasis and resistance to chemotherapy. Inhibiting specific carbohydrates frombinding to selectins has long been viewed as a potentially attractive approach for therapeutic intervention. The ability tosuccessfully develop drug-like compounds that inhibit binding with selectins, known as selectin antagonists, has beenlimited by the complexities of carbohydrate chemistry. We believe our expertise in carbohydrate chemistry and ourunderstanding of carbohydrate-protein binding interactions enable us to design selectin antagonists and other glycomimeticsthat may inhibit the disease-related functions of certain carbohydrates in order to develop novel drug candidates to addressunmet medical needs.Rivipansel is a glycomimetic drug candidate that acts as a pan-selectin antagonist, meaning it binds to all threemembers of the selectin family, E-, P- and L-selectin. We believe that rivipansel, by acting as a pan-selectin antagonist,inhibits the role that selectins play in VOC for people with SCD. VOC, one of the most severe complications of SCD, canresult in acute ischemic tissue injury at one or more sites, with inflammation and pain of varying degrees of severity. Thestandard of care in the United States for people experiencing VOC is to manage its symptoms, which typically includeshospitalization, narcotic pain management and hydration. We believe that rivipansel, if approved, would be the first drug tointerrupt the underlying cause of VOC, thereby potentially reducing the use of narcotics for pain management and enablingpatients to leave the hospital more quickly.We have completed four clinical trials of rivipansel involving a total of 163 subjects. In April 2013, we completed aPhase 2 clinical trial in which 76 patients hospitalized for VOC, ranging from 12 to 60 years old, were treated with thestandard of care plus either rivipansel or placebo. In this trial, patients treated with rivipansel experienced reductions in thetime to reach resolution of VOC, length of hospital stay and use of opioid analgesics for pain management, in each1 Table of Contentscase as compared to patients receiving placebo. This improvement was seen in both adult and pediatric patients. Adverseevent rates and severity were comparable between those treated with rivipansel and those receiving placebo.Since the completion of our Phase 2 clinical trial of rivipansel in 2013, Pfizer has been responsible for the furtherclinical development, regulatory approval and potential commercialization of rivipansel. Pfizer enrolled the first patient in aPhase 3 clinical trial in June 2015 and has announced that it expects to complete enrollment in this trial in the second half of2018, with preliminary results expected to be announced by the end of 2018. Under our license agreement with Pfizer, we areeligible to receive payments of up to $115.0 million upon the achievement of specified development milestones, up to $70.0million upon the achievement of specified regulatory milestones, and up to $135.0 million upon the achievement ofspecified levels of annual net sales of licensed products. We are also eligible to receive tiered royalties, with percentagesranging from the low double digits to the low teens, based on net sales of rivipansel worldwide, subject to reductions inspecified circumstances. Under a separate research agreement with the University of Basel, or the University, we have agreedto pay 10% of any future milestone payments and royalties we may receive from Pfizer with respect to rivipansel.We are developing a pipeline of other drug candidates based on our expertise in carbohydrate chemistry, includingcompounds that are designed to be specific to particular selectins. We are developing GMI-1271, a specific E-selectininhibitor, to be used in combination with chemotherapy to treat patients with AML, MM and potentially other hematologiccancers.E-selectin plays a critical role in binding cancer cells within vascular niches in the bone marrow, which prevents thecells from entering circulation where they can be more readily killed by chemotherapy. In separate animal studies, GMI-1271mobilized AML and MM cancer cells out of the bone marrow, making them more sensitive to chemotherapy. In both theAML and MM studies, tumor burden was significantly reduced in the animals treated with a combination of chemotherapyand GMI-1271 as compared to animals treated with chemotherapy alone. In addition, the combination of GMI-1271 withchemotherapy resulted in improved survival rates for the treated animals, compared to chemotherapy alone. In other animalstudies, GMI-1271 appeared to also protect normal cells from some of the side effects of chemotherapy. Common side effectsof chemotherapy include bone marrow toxicity resulting in neutropenia, which is an abnormally low number of neutrophils,the white blood cells that serve as the primary defense against infection, and mucositis, which is the inflammation andsloughing of the mucous membranes lining the digestive tract. Animals treated with GMI-1271 and chemotherapy had lesssevere neutropenia and mucositis and lower bone marrow toxicity as compared to animals treated with chemotherapy alone.We believe that treatment with GMI-1271 results in lower bone marrow toxicity due to its inhibition of E-selectin, whichinhibition makes stem cells in the bone marrow divide less frequently, thereby protecting them from chemotherapy agentsthat target rapidly dividing cells.We have completed an initial Phase 1 trial in healthy volunteers for GMI-1271 and in May 2017 we completedenrollment in a Phase 1/2 clinical trial in defined populations of patients with AML. In December 2017, at the annualmeeting of the American Society of Hematology, or ASH, we presented clinical data that showed high remission rates,improved overall survival and improved duration of survival, all compared to historical controls, which have been derivedfrom results from third party clinical trials evaluating standard chemotherapy. In addition, the data suggested a favorablesafety, pharmacokinetic, or PK, and biomarker profile for GMI-1271. We have also initiated a Phase 1 multiple ascendingdose-escalation trial of GMI-1271 in defined populations of patients with MM and plan to continue enrollment of the trial in2018. We anticipate initial topline data in the first quarter of 2019 in this trial. We are developing an additional drug candidate, GMI-1359, that simultaneously targets both E-selectin and achemokine receptor known as CXCR4. Since E-selectin and CXCR4 are both adhesion molecules that keep cancer cells inthe bone marrow, we believe that targeting both E-selectin and CXCR4 with a single compound could improve efficacy inthe treatment of cancers that affect the bone marrow such as AML and MM, as compared to targeting CXCR4 alone. GMI-1359 is currently being evaluated in a Phase 1 single-dose escalation trial in healthy volunteers. In this trial, volunteerparticipants receive a single injection of GMI-1359, after which they are evaluated for safety, tolerability, PK andpharmacodynamics. The randomized, double-blind, placebo-controlled, escalating dose study is being conducted at a singlesite in the United States. In addition to our programs described above, we are also advancing other preclinical-stage programs. These programsinclude small-molecule glycomimetic compounds that inhibit galectin-3, which we believe may have potential to be used forthe treatment of fibrosis, cancer and cardiovascular disease.2 Table of ContentsWe have retained the worldwide development and commercialization rights to all of our drug candidates other thanrivipansel. Our intellectual property portfolio includes ownership of, or exclusive rights to, issued patents and pending patentapplications claiming fundamental features of glycomimetic therapeutics, as well as those claiming methods of use for andchemical modifications of our drug candidates. Given the importance of our intellectual property portfolio to our businessoperations, we intend to vigorously enforce our rights and defend against challenges that have arisen or may arise in thisarea. Our issued patents directed to rivipansel and methods of use are expected to expire between 2023 and 2030. We alsohave issued patents which cover GMI-1271 and methods of use that expected to expire between 2032 and 2033. In addition,we have several pending patent applications covering GMI-1271 and/or methods of using it, the last expiring of which, ifissued, currently would be predicted to expire in 2037. “GlycoMimetics,” the GlycoMimetics logo and other trademarks or service marks of GlycoMimetics, Inc. appearing inthis Annual Report are the property of GlycoMimetics, Inc. This Annual Report contains additional trade names, trademarksand service marks of others, which are the property of their respective owners.Our StrategyOur goal is to be the leader in the discovery, development and commercialization of novel glycomimetic drugs toaddress unmet medical needs resulting from diseases in which carbohydrate biology plays a key role. Leveraging thepotentially broad applicability of our proprietary glycomimetics platform, our initial focus is to internally develop andadvance orphan drug candidates targeted at hematologic cancers and other diseases, and to out-license any drug candidateswe may develop that are targeted at larger market opportunities. The key elements of our strategy are to:·Advance and complete the clinical development of GMI-1271 for the treatment of AML. We are building onour experience developing rivipansel to investigate GMI-1271 for the treatment of AML as an adjunct tostandard chemotherapy. We have completed enrollment in a Phase 1/2 dose-escalation clinical trial in definedpopulations of patients with AML. In May 2017, GMI-1271 received breakthrough therapy designation fromthe FDA for the treatment of adult patients with relapsed or refractory AML and also received orphandesignation from the European Commission for the treatment of AML. We anticipate initiating a pivotal Phase3 clinical trial in mid-2018 for GMI-1271 in patients with relapsed or refractory AML. We have retainedworldwide development and commercialization rights to GMI-1271.·Advance the clinical development of GMI-1271 for the treatment of MM. We are enrolling a Phase 1 multipledose-escalation clinical trial for patients with MM who have not responded optimally to standardchemotherapy. We are currently enrolling patients at multiple clinical trial sites in Europe.·Advance the clinical development of GMI-1359 for the treatment of cancer. We are developing GMI-1359,which simultaneously inhibits both E-selectin and CXCR4, for potential use in the treatment of cancers withsignificant bone marrow involvement, such as hematologic cancers including AML and MM and certain solidtumors such as breast and prostate cancer. We are currently conducting a Phase 1 single-dose escalation trial inhealthy volunteers. We have retained worldwide development and commercialization rights to GMI-1359.·Support Pfizer’s further development of rivipansel. We will continue to support Pfizer, if requested, as Pfizerproceeds with further clinical development of rivipansel, including the Phase 3 clinical trial, and pursuesregulatory approval of rivipansel. We expect to use any milestone and royalty payments that we may receivefrom Pfizer to accelerate the development of our other drug candidates.·Identify and develop additional novel selectin antagonists to address unmet medical needs with significantmarket potential. We believe our glycomimetics platform will enable us to develop a broad pipeline ofpotential drug candidates that may be orphan drugs or may address larger market opportunities. We haveidentified a highly potent E-selectin antagonist which is being explored for subcutaneous delivery and whichwe believe could be of value in potential major market opportunities, such as the treatment of certain cancersand cardiovascular disease.·Apply our insights and our glycomimetics platform to other carbohydrate targets beyond selectins. We haveidentified additional opportunities where carbohydrates play critical roles in disease processes and3 Table of Contentswhere we believe we can apply our platform to create targeted glycomimetic drugs. We have designedinhibitors that specifically block the binding of galectin-3 to carbohydrate structures. Galectin-3 is a proteinthat is known to play critical roles in many pathological processes, including fibrosis, inflammation, cancer andcardiovascular disease. We plan to optimize these compounds and conduct preclinical experiments in in 2018to further characterize the effects of galectin-3 inhibitors on immune processes and anti-fibrotic activity. We arealso designing other galectin inhibitors that we believe could be used to treat various diseases.Our PlatformOur proprietary glycomimetics platform is based on our expertise in carbohydrate chemistry and our understanding ofthe role carbohydrates play in key biological processes. Carbohydrate structures on cell surfaces are responsible for complexcarbohydrate-protein binding interactions. Inhibiting these binding interactions affects the functions of these proteins andtheir interactions with other molecules. We believe our expertise enables us to design specific glycomimetic molecules thatcan mimic carbohydrate structures and thereby inhibit their disease-related functions.Our initial focus is on selectin antagonists, which we believe have the potential to address unmet medical needs in anumber of orphan and large market opportunities. Selectins have been shown to play a key role in a wide range of diseases,including hematologic disorders, cancer and cardiovascular disease.Our initial drug design efforts are focused on a naturally occurring, three-dimensional complex carbohydrate corestructure known as the Lewis structure. This core structure is naturally modified in a variety of ways to form many differentfunctional carbohydrates. These variations determine the biological functions of the carbohydrates, including functionsrelated to conditions such as inflammatory diseases, cancer and infection. Accordingly, we believe that this structureprovides the foundation for the design of glycomimetic drug candidates that could be used to address a variety of diseases.Once we identify a carbohydrate structure involved in a disease pathway, we design molecules that mimic thatcarbohydrate structure and inhibit its disease-related functions by binding to the carbohydrate’s target receptor, therebyblocking the binding by the native carbohydrate itself. For example, one of the naturally modified Lewis structures binds toselectins, which play a key role in VOC. Rivipansel mimics that carbohydrate structure and accordingly binds to selectins,which we believe thereby inhibits the progression of VOC. In addition, our glycomimetic molecules are designed to havegreater affinity to the carbohydrate’s target receptor than does the native carbohydrate. This means that the glycomimeticmolecules possess stronger intermolecular forces between themselves and the target receptors, and thus “outcompete” thenative carbohydrates in binding to the relevant target receptors, thereby inhibiting their disease-related functions. Using ourglycomimetics platform, we have designed and synthesized a proprietary library of these structures targeting differentbiological processes.Our glycomimetics platform includes intellectual property, know-how, expertise, proprietary biological informationand biochemical assays, all of which support the rational design of potent glycomimetic compounds. These include:·Know-how to successfully mimic the Lewis structure, which is common to a number of functional carbohydrates.·Use of empirical methods to determine critical interactions between variations of a particular functionalcarbohydrate and its target molecule.·Application of the empirically determined bioactive structure of the functional carbohydrate for docking into thebinding area of the crystal structure of the target molecule.·Expertise in stabilizing the bioactive core of glycomimetic compounds and increasing the number of interactioncontact points to improve affinity.·Experience and technology in synthetic organic chemistry required for the specialized synthesis of carbohydratesand their modifications. 4 Table of Contents·Proprietary assays to determine the binding characteristics, inhibitory activity and biological activity ofglycomimetic compounds.Our PipelineWe have discovered our drug candidates internally through a rational drug design approach that couples our expertisein carbohydrate chemistry with our knowledge of carbohydrate biology. We are actively developing glycomimetic drugcandidates based on this expertise. Our drug candidates and their target indications and development status are summarizedin the chart below. Rivipansel —Targeting Selectins to Treat VOC Rivipansel is being developed to treat VOC with the goal of reducing duration of VOC episodes, length of hospitalstay and use of opioid analgesics for pain management. In our Phase 2 clinical trial, patients treated with rivipansel plus thestandard of care demonstrated improvement in these endpoints, in each case as compared to patients receiving placebo plusthe standard of care. Sickle Cell Disease and VOC SCD is a genetic disease that, according to the Centers for Disease Control and Prevention, or CDC, affects millionsof people throughout the world, including an estimated 100,000 people in the United States and an estimated 60,000 peoplein Europe. Patients with SCD have chronic and acute damage to their tissue and organs. One of the most common and severecomplications of SCD is vaso-occlusive crisis, or VOC, which is the occurrence of unpredictable episodes of acute pain, oftenvery excruciating, in the affected parts of the body. Recurrent episodes may cause irreversible organ damage. The CDCestimates that VOC resulted in approximately 75,000 hospitalizations in the United States in 2010. According to theNational Hospital Discharge Survey conducted by the National Center for Health Statistics, these hospitalizations have anaverage duration of approximately six days.5 Table of ContentsAmong both adults and children with SCD, VOC is the most common reason for seeking medical attention resultingin hospitalization. As there are no approved therapies that interrupt VOC once it has started or that treat the underlyingischemic event, the standard of care for people experiencing VOC is limited to supportive care consisting of painmanagement, hydration and treatment of any precipitating events such as infection and inflammatory conditions. Market Opportunity for Rivipansel in SCD We believe that effective, on-demand (as needed) treatment for VOC could provide significant clinical andpharmacoeconomic benefit. According to the U.S. Agency for Healthcare Research and Quality, the average hospital chargesin the United States for a patient treated for VOC were approximately $20,000 in 2006. In some states, these charges may besubstantially higher. For example, according to the California Office of Statewide Health Planning and Development, theaverage hospital charges for a patient treated for VOC in California were over $40,000 in 2006. A reduction in the length of ahospital stay following treatment with rivipansel could significantly reduce these costs of care. Additionally, if rivipansel is shown to be safe and effective in reducing the duration of VOC in hospitalized patients, itcould also be tested to determine if hospitalization could be prevented with use of rivipansel in the emergency department,or if VOC could be managed safely and effectively in the home or in an outpatient setting through a self-administered dosageform, thereby avoiding costly emergency department visits. We believe that uses in each of these settings representpotentially significant market opportunities. The Role of Selectins in VOC The cause of vascular occlusion involves both an inflammatory component and a mechanical component. In theinflammatory component, white blood cells begin to roll along and then adhere to the endothelium, the thin layer of cellsthat lines the interior surface of blood vessels. These white blood cells then become activated and express adhesion receptorsknown as integrins, which bind and form aggregates with platelets, red blood cells and other white blood cells. These cellaggregates are responsible for the mechanical component of vascular occlusion, in which rigid sickled red blood cells aremore easily caught in the post-capillary venules, which are very small blood vessels connecting the capillaries and the veins.The resulting vascular occlusion causes slowing of blood flow in the post-capillary venules, contributing to inadequateoxygen supply in the local tissue, known as ischemia, which in turn causes further tissue inflammation and pain. The development of VOC is illustrated in the following diagram: Selectins are important in this process because they act as adhesion molecules and play a key role in the initialrecognition and binding of white blood cells to the endothelial cells, and their formation of aggregates with platelets, redblood cells and other white blood cells. White blood cells express carbohydrates on their surfaces that bind to E-selectin thatis present on inflamed vascular endothelium. White blood cells bound to E-selectin on the endothelial cells then becomeactivated and act as adhesion sites for platelets, red blood cells and other white blood cells, thereby leading to the formationof an occlusion. Rivipansel is a glycomimetic drug candidate designed to inhibit binding of all three types of selectins andinhibit the selectin-mediated recognition and binding of white blood cells to the endothelium. The6 Table of Contentsrationale for the development of rivipansel to treat VOC is that, by blocking these steps in the vaso-occlusive process, it hasthe potential to decrease the duration and intensity of VOC. Limitations of the Current Standard of Care for VOC Although bone marrow transplant is currently available and can be curative for SCD, its use is greatly limited by thelack of availability of matched donors and by the risk of serious complications, including graft versus host disease andinfection and death. Until 2017, the only drug approved to treat SCD was hydroxyurea. Hydroxyurea, available in both generic and brandedformulations, is a once daily oral treatment intended to reduce the frequency of VOC in patients with SCD who haverecurrent VOC episodes. While hydroxyurea has been shown to reduce the frequency of hospitalization due to VOC, in somepatient groups, it is not effective in relieving symptoms or accelerating the resolution of an ongoing VOC episode. Moreover,hydroxyurea is not suitable for all patients. Its uptake and effectiveness can be limited by a lack of compliance to the dosingregimen, inconsistent patient responses, variable tolerability and concerns regarding long-term toxicity [and other adverseside effects]. In particular, hydroxyurea is labeled to inform patients that it can cause a severe decrease in the number ofblood cells in a patient’s bone marrow, which may increase risks that the patient will develop a serious infection or bleeding,and that it may increase the risk that the patient will develop certain cancers. Furthermore, hydroxyurea is not effective inrelieving symptoms or accelerating the resolution of an ongoing VOC episode. In July 2017, the FDA approved Endari, a twice-daily, oral, prophylactic therapy intended to reduce the acutecomplications of SCD in adult and pediatric patients 5 years of age and older. Common side effects of Endari includeconstipation, nausea, headache, abdominal pain, cough, pain in the extremities, back pain and chest pain. Given its recentlaunch in December 2017, real world experience with Endari is limited. Since available therapies do not address the underlying pathophysiology of an ongoing VOC episode, supportive carewith opioid narcotics and hydration remain the current standard of care for VOC until the event runs its natural course. Painmanagement often starts with oral medications taken at home at the onset of pain. However, if the pain is not relieved, or if itprogresses, patients typically seek medical attention in a clinic setting or emergency department. Pain that is not controlledin these settings typically requires hospitalization for more potent pain medications, typically administered intravenously.The patient must stay in the hospital to receive these intravenous pain medications and fluids until the VOC resolves and thepain subsides. Use of narcotics can lead to tissue or organ damage and resulting complications and morbidities, prolongedhospital stays and associated continuation of pain and suffering. Treatment of pain with IV narcotics and management ofVOC-related complications typically require hospital stays ranging from a few days to a few weeks, with an average length ofstay of approximately six days. Other supportive measures during hospitalization include supplemental oxygen andtreatment of any concurrent infections or other conditions. In light of the debilitating effects of VOC and the associated high costs of care, there is a significant unmet medicalneed for treatment that can be taken at the onset of a VOC episode that selectively targets the underlying inflammatoryischemic event in order to reduce the severity and duration of VOC in SCD patients. We believe that rivipansel canpotentially satisfy this unmet medical need.Rivipansel Clinical ResultsWe completed a Phase 2 clinical trial of rivipansel in sickle cell patients hospitalized for VOC. This trial was arandomized, double-blind, placebo-controlled trial at 22 sites in the United States and Canada evaluating the safety, efficacyand PK of multiple IV doses of rivipansel or placebo in 76 patients hospitalized for VOC, ranging from 12 to 60 years old. Ofthese patients, 43 received rivipansel and 33 received placebo, in both cases in addition to the standard of care. Patientsreceiving rivipansel in the trial received one of two dose levels. Patients in the low dose group received a loading dose of 20mg/kg, followed by a 10 mg/kg dose every 12 hours. Patients in the high dose group received a loading dose of 40 mg/kg,followed by a 20 mg/kg dose every 12 hours.In patients receiving rivipansel in this trial, there were reductions in multiple measures related to a VOC episode ascompared to patients receiving placebo. Two widely used statistical methods, known as ANCOVA and Kaplan-Meier, wereused to analyze the results of this trial. The time to reach resolution of VOC, the primary endpoint of the trial, was7 Table of Contentsreduced in the patients receiving rivipansel by a mean of 41.0 hours, as measured by ANCOVA, with a p-value of 0.192, andreduced by a median of 63.3 hours, as measured by Kaplan-Meier, with a p-value of 0.187. P-value is a conventionalstatistical method for measuring the statistical significance of clinical results. A p-value of 0.05 or less represents statisticalsignificance, meaning that there is a less than 1-in-20 likelihood that the observed results occurred by chance. In addition, inthe patients receiving rivipansel, the time to hospital discharge was reduced by a mean of 54.7 hours, as measured byANCOVA, with a p-value of 0.096, and a median of 83.9 hours, as measured by Kaplan-Meier, with a p-value of 0.092. Thetime to transition off IV analgesics was reduced by a mean of 47.0 hours, as measured by ANCOVA, with a p-value of 0.137,and a median of 75.7 hours, with a p-value of 0.089, as measured by Kaplan-Meier. The cumulative amount of opioidanalgesic administered during hospitalization was reduced by 83%, as measured by ANCOVA, with a p- value of 0.01.Although the Phase 2 clinical trial was not large enough to detect statistically significant differences in these endpoints,other than with respect to the reduction in cumulative amount of opioid analgesic administered, we believe the observedreductions in these measures in patients treated with rivipansel, and the consistency of a positive response across multiplemeasures, demonstrate the potential benefit of rivipansel.We believe the favorable effects we observed in our Phase 2 clinical trial are the result of mechanism-based resolutionof VOC. Specifically, we believe that by inhibiting selectin-mediated adhesion of white blood cells to the endothelium,rivipansel prevents propagation of VOC and promotes early resolution. Results from the Phase 2 clinical trial provide the firstclinical evidence of a positive effect of rivipansel in adult and pediatric patients experiencing VOC. No currently availabletherapies provide similar benefits to patients in VOC. Based on the data from our Phase 2 clinical trial for rivipansel, webelieve rivipansel has the potential to become the first drug approved to treat VOC in both adult and pediatric patientpopulations.If rivipansel is demonstrated to be safe and effective for the treatment of VOC, we believe it may show substantialclinical and pharmacoeconomic benefit. If patients treated with rivipansel are discharged more quickly from the hospital,there is potential to reduce the costs of hospitalization, in addition to showing clinical benefit by reduced duration of VOCepisodes and reduced use of opioid analgesics for pain management. In addition, if rivipansel is shown to be safe andeffective for treating VOC in hospitalized patients, it is possible that it could be tested in patients experiencing VOC who arenot hospitalized to determine if hospitalization could be prevented or if pain from VOC could be managed safely andeffectively in the home or in an outpatient setting. We believe that uses in each of these settings could represent significantmarket opportunities for rivipansel. Following the completion of the Phase 2 clinical trial, Pfizer is now responsible for thefurther clinical development, regulatory approval and commercialization of rivipansel.Following transfer of the IND, Pfizer has undertaken significant activity to work toward a New Drug Application, orNDA, for rivipansel including, an approved special protocol assessment, or SPA, agreement for the design, endpoints andstatistical analysis approach of the Phase 3 clinical trial. Pfizer enrolled the first patient in this Phase 3 clinical trial in June2015. The Phase 3 trial, entitled “RESET” (Rivipansel: Evaluating Safety, Efficacy and Time to Discharge), is assessing theefficacy and safety of rivipansel for the treatment of VOC in patients hospitalized with sickle cell disease. Pfizer intends toenroll at least 350 subjects with sickle cell disease, aged six and older who are hospitalized for VOC, in this Phase 3,multicenter, randomized, double-blind, placebo-controlled, parallel-group trial in order to evaluate the efficacy and safety oftreatment with rivipansel. Trial participants must be receiving treatment with intravenous, or IV, opioids for their VOC andmust be able to receive the first dose of rivipansel within 24 hours of initiation of intravenous opioid therapy. The primaryendpoint for the trial will be time to readiness-for-discharge. Key secondary endpoints will include time to discharge,cumulative IV opioid consumption and time to discontinuation of IV opioids. Pfizer has announced completion ofenrollment in the Phase 3 clinical trial is expected in the second half of 2018.GMI-1271—Targeting the Bone Marrow Microenvironment to Treat Hematologic CancersWe are developing GMI-1271, a specific E-selectin antagonist, to be used adjunctively with standard chemotherapy totreat AML, MM and other hematologic cancers. We believe that GMI-1271 may be used as first-line treatment for elderlypatients with AML or MM, for patients with relapsed or refractory AML, as well as for patients with relapsed or refractoryMM. GMI-1271 targets interactions between cancer cells and the bone marrow microenvironment. In preclinical studies,combining GMI-1271 with chemotherapy made cancer cells more sensitive to chemotherapy. In other preclinical studies,GMI-1271 also reduced some of the toxic effects of chemotherapy, including neutropenia and mucositis, on normal cells. 8 Table of ContentsGMI-1271 received orphan drug designation from the FDA in May 2015 for the treatment of AML. In June 2016, GMI-1271 received fast track designation from the FDA for the treatment of adult patients with relapsed or refractory AML andelderly patients aged 60 years or older with AML. In May 2017, GMI-1271 received breakthrough therapy designation fromthe FDA for the treatment of adult patients with relapsed or refractory AML. In May 2017, the European Commission, basedon a favorable recommendation from the EMA Committee for Orphan Medicinal Products, granted orphan designation forGMI-1271 for the treatment of AML.Acute Myeloid LeukemiaAML, a hematologic cancer that is characterized by the rapid growth of abnormal white blood cells that accumulate inthe bone marrow and interfere with the production of normal blood cells, is a relatively rare disease, but one that accounts forthe largest number of annual deaths from leukemia in the United States. According to the Surveillance, Epidemiology, andEnd Results Program managed by the National Cancer Institute, there were an estimated 21,380 new cases of AML diagnosedin 2017 in the United States. Approximately 352,000 patients in the world are diagnosed with AML annually. AML causedan estimated 10,590 deaths in 2017 in the United States.AML is more commonly present in elderly patients, with a median age at diagnosis of 68 years according to theNational Cancer Institute. In a review published in the Journal of Clinical Oncology, the median overall survival of patients60 years old or older was nine months. The overall five-year relative survival rate for all AML patients is 26.9%, and only 3-8% for patients over 60 years old at diagnosis. Relative survival is a statistical measure of net survival that is calculated bycomparing observed survival with expected survival from a comparable set of people who do not have AML, in order tomeasure the excess mortality that is associated with the AML diagnosis.A number of published studies indicate that only some AML patients who receive chemotherapy achieve a completeresponse, which is defined as the disappearance of all signs of AML, and that most patients with a complete response willeventually relapse. Patients who do not enter remission are referred to as refractory, meaning that they are resistant to thechemotherapy treatment.We believe there is a need for new treatment options for elderly patients with AML, as well as those AML patients whorelapse or develop refractory disease. Most AML patients with relapsed or refractory disease have no established treatmentoptions and, accordingly, may be referred for participation in clinical studies of potential new therapies. For patients whoelect not to participate or are unable to participate, treatment options typically include chemotherapy regimens,hypomethylating agents and supportive care. Further, many elderly patients with AML are too frail to undergo chemotherapyas a result of other medical conditions, and may only be able to tolerate pain comfort or control measures. Without treatment,however, AML is uniformly fatal. Multiple MyelomaMM is a hematologic cancer that is characterized by the growth of abnormal white blood cells of the bone marrow thateventually infiltrates various organs and leads to bone destruction, bone marrow failure, including direct and indirect effectson the blood, skeleton, and kidneys. MM is the most frequent tumor that occurs primarily in bone and the second mostcommon hematological malignancy in the United States and Europe. MM accounts for 10% to 15% of hematologic cancers,and 22% of deaths from these cancers. Approximately 114,000 new cases of MM were diagnosed worldwide in 2012. In theUnited States, according to the National Cancer Institute, an estimated 30,280 people were newly diagnosed with MM in2017. MM caused an estimated 12,590 deaths in 2017 in the United States. MM is rare in individuals younger than 40 yearsold and the average age at diagnosis is approximately 70 years. More than 33% of patients are over 75 years of age, makingtreatment with chemotherapy more complicated due to fewer treatment options being available, patients being ineligible fortransplant, and decreased ability to tolerate sustained chemotherapy due to poor general health.Despite the fact that recent treatment options for MM have led to improved response rates and increased short-termsurvival, responses are transient and most patients with MM will ultimately relapse and succumb to their cancer. MM is notconsidered curable with current approaches. The five-year overall survival rate for all patients in the United States isapproximately 50%. Although second and later remissions can be achieved with additional treatment, tumors typically recurmore aggressively after each relapse, leading to decreased duration of response and ultimately culminating in thedevelopment of treatment-refractory disease. Median survival for treatment-refractory disease typically ranges from five9 Table of Contentsmonths for event-free survival and from nine months for overall survival and responses to treatment are characteristicallyshort, most likely due to resistant disease. This loss of response complicates therapy of patients in later-line treatment,shortens survival and results in high mortality rates. Role of E-selectin in AML and MME-selectin has been shown to play important roles in the progression of AML and MM. This has been observed inseveral studies, which have shown that levels of E-selectin correlate with tumor infiltration and relapse in AML and survivalrates for both diseases. We therefore believe that our E-selectin antagonist, GMI-1271, has the potential to improve thecurrent treatment of patients with AML or MM.GMI-1271 Preclinical DevelopmentSome leukemia cells, known as blast cells, bind to E-selectin in the bone marrow where they are relatively protectedfrom the effects of chemotherapy. This phenomenon is known as cell adhesion-mediated drug resistance, or CAMDR. Webelieve that E-selectin inhibition disrupts the adhesion involved in CAMDR and mobilizes blast cells out of the bonemarrow and into the bloodstream, making them more susceptible to chemotherapy. We believe that this mechanism of actionmay allow GMI-1271 to improve chemotherapy response rates, duration of remission and, ultimately, survival in patientswith hematologic cancers such as AML. In one in vivo study in a mouse model of AML, combining GMI-1271 with chemotherapy mobilized AML blast cellsand significantly reduced tumor burden as compared to treatment with chemotherapy alone. In an in vitro study, AML cellsbound to E-selectin were more resistant to chemotherapy. In a related study, when treated with GMI-1271, the resistance ofsuch cells to chemotherapy was reduced. Tumor cells of patients who have relapsed AML, when tested in the laboratory,bound significantly higher levels of E-selectin than tumor cells of patients at initial diagnosis. Additional preclinical studiesin mouse models of AML, in which E-selectin was observed to be upregulated, suggest that AML cells binding to E-selectinhave increased chemo-resistance. This is due to the induction of tumor cell survival signaling pathways as a consequence ofE-selectin binding. This effect within the bone marrow microenvironment is unique to E-selectin as compared to othervascular adhesion molecules and can be blocked by GMI-1271. The results of this preclinical study were presented in anoral presentation at the 2017 ASH Annual Meeting in December 2017, and we believe the findings provide importantinformation about how treatment with GMI-1271 may improve sensitivity to chemotherapy. As GMI-1271 disrupts the interactions between cancer cells and bone marrow microenvironment, its mechanism ofaction is not limited to a single tumor type. In addition to our studies in AML, we have also tested the drug candidate inother cancer models. In three xenograft mouse models of MM, GMI-1271 was evaluated in combination with the proteasomeinhibitors, bortezomib or carfilzomib. Treatment of mice with GMI-1271 plus bortezomib or GMI-1271 plus carfilzomibsignificantly improved survival when compared to chemotherapy alone. In addition, treatment with GMI-1271 resulted inmobilization of MM cells in the peripheral blood past the point of elimination of the drug from plasma and bone marrow,thereby making them more susceptible to chemotherapy. These data provide evidence that GMI-1271 is a potential treatmentoption to enhance response to chemotherapy in MM. Moreover, in in vivo studies involving animal models of chronicmyelogenous leukemia and acute lymphoblastic leukemia, GMI-1271, as an adjunct to standard-of-care chemotherapy,decreased tumor burden and improved survival over standard-of-care chemotherapy alone. In addition to its anti-tumor effects, GMI-1271, in animal models, has shown protection against some of the toxicitiesof chemotherapy. In particular, animals treated with GMI-1271 in combination with chemotherapy had less severeneutropenia and mucositis and lower bone marrow toxicity as compared to animals treated with chemotherapy alone. Webelieve that treatment with GMI-1271 results in lower bone marrow toxicity due to its inhibition of E-selectin, therebymaking hematopoietic stem cells divide less frequently and protecting them from chemotherapy agents that target rapidlydividing cells. Hematopoietic stem cells are blood cells that give rise to all other types of blood cells and are heavilyconcentrated in the bone marrow. Similar effects have been demonstrated with rivipansel and were published in the journalNature Medicine in December 2012. Based on these reductions in some of the toxicities of chemotherapy, we are evaluatingthese effects as secondary efficacy endpoints in our clinical trials. 10 Table of ContentsGMI-1271 Clinical TrialsIn August 2014, we completed a Phase 1 trial of GMI-1271 in healthy volunteers. The single-site Phase 1 trial was arandomized, double-blind, placebo-controlled, single ascending intravenous dose trial. In the trial, we evaluated the safety,tolerability and PK of GMI-1271. Twenty-eight healthy adult subjects were enrolled in cohorts to receive study drug at threedose levels. In the trial, we observed that the subjects tolerated GMI-1271 well, and that the PK for GMI-1271 were aspredicted based on preclinical data. In May 2015, we commenced a multinational, Phase 1/2, open-label trial of GMI-1271 as an adjunct to standardchemotherapy in patients with AML. This trial in males and females with AML was conducted at a number of academicinstitutions in the United States, Ireland and Australia. The trial consists of two parts. In the Phase 1 portion, escalationtesting was performed to determine a recommended GMI-1271 dose in combination with standard chemotherapy to be usedin the Phase 2 portion. In the Phase 2 portion of the trial, dose expansion was performed at the recommended dose of 10mg/kg GMI-1271 in combination with standard chemotherapy. The primary objective of the trial was to evaluate the safetyof GMI-1271 in combination with chemotherapy. Secondary objectives were to characterize PK and pharmacodynamics andto observe anti-leukemic activity. A total of 19 patients with relapsed or refractory AML were enrolled and dosed with asingle cycle of treatment with GMI-1271 and chemotherapy in the Phase 1 portion of the trial. In the Phase 2 portion, onecohort of 25 patients over 60 years of age with newly diagnosed AML and a second cohort of 47 patients with relapsed orrefractory AML were enrolled. Unlike in the Phase 1 portion, some of the patients in the Phase 2 portion were treated withmultiple cycles of GMI-1271 with chemotherapy. In June 2017, we presented interim data from the Phase 2 portion of the trial at the annual meetings of the AmericanSociety of Clinical Oncology, or ASCO, and the European Hematology Association, or EHA. In December 2017, wepresented further updated data at ASH. In the relapsed or refractory disease arm of the trial, 66 patients had been enrolled. Ofthe 54 relapsed/refractory patients with AML for whom median follow-up was 6.6 months, the clinical remission (CR+CRi)rate was 43%. The CR/CRi rate is the percentage of patients who achieved remission, with either full or incomplete bloodcount recovery. The mortality rate among this group at 60 days was 9%. Median overall survival by the Kaplan-Meiermethod was 9.4 months. This compares favorably to a median overall survival of up to 5.4 months reported for historical,matched controls treated with mitoxantrone, etoposide and cytarabine (MEC) alone. Median duration of remission was 11.1months for the GMI-1271 treatment group. We believe these results compare favorably to what would be expected in thispopulation, based on published historical results from third party clinical trials evaluating standard chemotherapy in similarpatients. Researchers also observed a median E-selectin ligand expression of 35% on bone marrow blasts at baseline, withhigher rates among those patients in this cohort who achieved remission. In the newly-diagnosed, treatment-naïve elderlyarm of the trial, 25 patients had been enrolled. Among these 25 patients for whom median follow-up with 10.5 months, theclinical remission rate was 68%, with a 75% remission rate for patients with de novo disease and 62% remission rate forpatients with secondary AML. Median overall survival by the Kaplan-Meier method was 15.8 months. This comparesfavorably to a historical median overall survival of approximately 12 months in matched controls treated with 7+3chemotherapy alone. Median duration of remission was 14.8 months and median event free survival was 11.3 months. Acrossboth populations, GMI-1271 was generally well tolerated with no obvious incremental toxicity observed and lower thanexpected rates of severe, debilitating, grade 3-4 mucositis reported at 3% incidence reported versus historical rates of 20-25%incidence with MEC induction chemotherapy alone. In March 2018, we announced our design for a randomized, double-blind, placebo-controlled Phase 3 clinical trial toevaluate GMI-1271 in individuals with relapsed/refractory AML, which design is aligned with guidance received from theFDA. Based on consultations with the FDA, the single pivotal trial is planned to enroll 380 adult patients at approximately30 to 40 centers in the United States, Canada, Europe and Australia, with enrollment expected to begin in the third quarter of2018. The primary efficacy endpoint will be overall survival and, importantly, the FDA has indicated that data on overallsurvival will not need to be censored for transplant in the primary efficacy analysis, meaning that patients who proceed totransplant will continue to be included as part of the survival analysis. The dosing regimen for our planned Phase 3 trial willbe the same as for our completed Phase 2 trial. All patients will be treated with standard chemotherapy of either MEC or FAI(fludarabine, cytarabine and idarubicin), with some of the patients randomized to receive GMI-1271 in addition tochemotherapy. Patients receiving GMI-1271 will be dosed for one day prior to initiation of chemotherapy, twice a daythrough the chemotherapy regimen, and then for two days after the end of chemotherapy. The dose regimen will be fixed,rather than weight-based, which we believe will simplify administration. We plan to offer multiple cycles of consolidationtherapy in both arms of the trial for patients who achieve remission. We believe11 Table of Contentsthat multiple cycles of treatment in patients who respond may drive an even deeper response in patients treated with GMI-1271. If this is the case, it could lengthen the duration of remission with potential for additional benefit on survival. Key secondary endpoints of the Phase 3 trial will include the incidence of severe mucositis and remission rate, whichwill be assessed in a hierarchical fashion for potential inclusion in the product labeling, if GMI-1271 is approved formarketing by the FDA. We expect preliminary results from this trial to be available by the end of 2020. In February 2018, we entered into an agreement with the Haemato Oncology Foundation for Adults in the Netherlands,or HOVON, to initiate clinical trial startup activities to evaluate GMI-1271 in adults with newly diagnosed AML but whocannot tolerate intensive chemotherapy, as well as in patients with myelodysplastic syndrome, or MDS, with a high risk ofleukemia. The HOVON trial will be the first to evaluate GMI-1271, together with decitabine, in this underserved populationof AML and MDS patients who are not considered by their physicians to be candidates for intensive chemotherapy; thesetwo populations represent a significant potential indication expansion opportunity for GMI-1271. HOVON intends to enrollapproximately 140 patients in the clinical trial, including a control arm. Patients will be evaluated after three cycles oftherapy, and key efficacy endpoints will include remission rate, disease-free survival and overall survival. The trial isexpected to start this year and will be conducted in five countries across Europe. In December 2015, at the ASH annual meeting, we presented preclinical data suggesting that GMI-1271 could reverseresistance of certain chemotherapies seen in MM. In September 2016, we dosed the first patient in a Phase 1 multiple dose-escalation clinical trial in defined populations of patients with MM who have not responded optimally to standardchemotherapy. In this trial, we are evaluating the efficacy, safety and PK of GMI-1271, combined with bortezomib- orcarfilzomib-based chemotherapy, for the treatment of MM. We are currently enrolling patients at multiple clinical trial sitesin Europe and anticipate initial topline data in the first quarter of 2019 in this trial. GMI-1359 - Drug Candidate Targeting E-selectin and CXCR4The chemokine CXCR4 has emerged as an important pro-inflammatory cytokine that is involved in cell migrationthroughout the body. Like E-selectin, tumor cells may also use the CXCR4 cellular pathway, contributing tochemoresistance, metastatic disease and ultimately decreased survival. We have an additional drug candidate, GMI-1359,that simultaneously targets both E-selectin and CXCR4. Since E-selectin and CXCR4 are both adhesion molecules that keepcancer cells in the bone marrow, we believe that targeting both E-selectin and CXCR4 with a single compound couldimprove efficacy in the treatment of cancers that affect the bone marrow, such as hematologic cancers, including AML andMM, and certain solid tumors, such as breast and prostate cancer, as compared to targeting CXCR4 alone. At the ASH annualmeeting in December 2016, we presented preclinical data suggesting that GMI-1359 has a unique tumor cell mobilizationprofile and enhanced the ability of chemotherapy to target and improve survival from a high-risk form of mutated AML. InNovember 2016, at the annual meeting of the Society for Immunotherapy of Cancer, we presented data from a preclinicalstudy in which GMI-1359, in combination with an antibody against the cancer regulatory programmed death receptor ligand,or PD-L1, shortened time to complete tumor regressions in an animal model of colon cancer. In the preclinical study, thecombination therapy also selectively reduced regulatory T cells, which are a class of lymphocytes that suppress immuneresponses, in the tumor, and created a more favorable immune-mediated anti-tumor environment. We are currently conducting a first-in-human Phase 1 single-dose escalation trial of GMI-1359 in healthy volunteers. Inthis trial, volunteer participants receive a single injection of GMI-1359, after which the subjects are evaluated for safety,tolerability, pharmacokinetics and pharmacodynamics. The randomized, double-blind placebo controlled escalating dosestudy is being conducted at a single site in the United States. Galectin Inhibitors Using our glycomimetics platform, we have designed galectin-3 inhibitors that specifically block the binding ofgalectin-3 to carbohydrate structures. Galectin-3 is a protein that is known to play critical roles in many pathologicalprocesses, including fibrosis, checkpoints in T-cell exhaustion during cancer immunotherapy, chemotherapy resistance andcardiovascular disease. We plan to optimize these compounds and conduct preclinical experiments in 2018 to further12 Table of Contentscharacterize the effects of our galectin-3 inhibitors on immune processes and anti-fibrotic activity. We are also designingother galectin inhibitors that we believe could be used to treat various diseases.Our Collaboration with Pfizer for RivipanselOverviewIn October 2011, we entered into a license agreement with Pfizer, under which we granted Pfizer an exclusiveworldwide license to develop and commercialize rivipansel, for all fields and uses. The products licensed under theagreement also include certain backup compounds, along with modifications of and improvements to rivipansel that meetdefined chemical properties.Under the terms of the agreement, we received a $22.5 million upfront payment and are eligible to earn up to $115.0million upon the achievement of specified development milestones, including the dosing of the first patients in Phase 3clinical trials for up to two indications and the first commercial sale of a licensed product in the United States and selectedEuropean countries for up to two indications, up to $70.0 million upon the achievement of specified regulatory milestones,including the acceptance of our filings for regulatory approval by regulatory authorities in the United States and Europe forup to two indications, and up to $135.0 million upon the achievement of specified levels of annual net sales of licensedproducts. We are also eligible to receive tiered royalties for each licensed product, with percentages ranging from the lowdouble digits to the low teens, based on net sales of rivipansel worldwide, subject to reductions in specified circumstances.The first potential milestone payment under the Pfizer agreement was $35.0 million upon the initiation of dosing of the firstpatient in a Phase 3 trial of rivipansel by Pfizer. Under the collaboration, Pfizer made a $15.0 million non-refundablepayment to us in May 2014, and the dosing of the first patient in the Phase 3 clinical trial triggered the remaining $20.0million milestone payment to us, which we received in August 2015. There were no payments from Pfizer received in 2016 or2017.Development and Commercialization ObligationsPfizer will initially develop and seek approval for rivipansel in the field of sickle cell disease under the agreement. Wewere responsible for completion of the Phase 2 clinical trial relating to VOC associated with sickle cell disease. Followingthe completion of the Phase 2 clinical trial, we now have no further development or commercialization obligations, andPfizer is required to use commercially reasonable efforts, at its expense, to develop, obtain regulatory approval for andcommercialize rivipansel for sickle cell disease in the United States. Pfizer generally must notify us in writing promptly ofany decision to cease development activities, efforts to obtain regulatory approval or commercialization of rivipansel for thefirst approved indication.GovernanceThe agreement establishes a non-voting, joint steering committee to facilitate the exchange of information regardingthe development of licensed products and the initial commercialization plans for such products.Exclusivity RestrictionsDuring the term of the agreement, we may not directly or indirectly commercialize any pharmaceutical compound orproduct that is labeled for the treatment, prevention or prophylaxis of a vaso-occlusive or painful crisis associated with sicklecell disease anywhere in the world, subject to specified exceptions if we or our affiliates were to undergo a change of control.Term and TerminationThe agreement will expire on a licensed product-by-licensed product and country-by-country basis on the date oftermination of the applicable royalty term with respect to each licensed product in each country and in its entirety upon theexpiration of all applicable royalty terms for all licensed products in all countries. The royalty term for each licensed productin each country is the period commencing with the first commercial sale in the applicable country and ending on theexpiration of specified patent coverage or 10 years following the first commercial sale in the applicable country, whichever islater. Pfizer has the right to terminate the agreement, subject to certain notice requirements. The agreement13 Table of Contentsmay also be terminated in its entirety either by Pfizer or by us in the event of an uncured material breach by the other party orin the event the other party becomes subject to specified bankruptcy, insolvency or similar circumstances.Effects of TerminationUpon termination of the agreement by Pfizer for convenience or by us, all rights and licenses granted to Pfizer underthe agreement will terminate and Pfizer is obligated to grant us a non-exclusive worldwide license to specified Pfizerproprietary rights to develop and commercialize licensed products in the form being used or sold by Pfizer at the time of suchtermination, to transfer to us specified data and regulatory materials and approvals, and to provide for the continued supplyof licensed products subject to specified terms. If Pfizer has completed additional clinical trials for the applicable licensedproduct and we obtain such a license or obtain such data and materials and commercialize a licensed product, then, for aperiod of 10 years from the first commercial sale of such licensed product, Pfizer is eligible to receive royalties at definedpercentages in the low single-digits on net sales of such licensed product worldwide, up to a defined aggregate payment cap.The applicable royalty rate and maximum royalty payment cap depend on the stage of clinical development at the time ofsuch termination.Research Services Agreement with University of Basel We entered into a research services agreement with the University of Basel, or the University, for the discovery andevaluation of selectin antagonists. The research under this agreement has been completed; however, certain patents coveringthe rivipansel compound remain subject to provisions of the research services agreement. Under the terms of the researchservices agreement, if we receive any future milestone payments or royalties from Pfizer with respect to rivipansel, we agreedto pay the University 10% of those amounts, subject to specified exceptions. In February 2016, we paid $2.0 million to theUniversity based upon our receipt of a $20.0 million non-refundable milestone payment from Pfizer in August 2015. Werecorded this payment during the year ended December 31, 2015, at the time the payment became due to the University.There were no additional payments due to the University for the years ended December 31, 2016 or 2017. The researchservices agreement remains in effect until we are no longer obligated to make any potential payments.Intellectual Property We strive to protect the intellectual property that we believe is important to our business, including seeking andmaintaining patent protection intended to cover the composition of matter of our drug candidates and their methods of use.We have issued patents directed to rivipansel and methods of use that are expected to expire between 2023 and 2030. Wealso have issued patents which cover GMI-1271 and methods of use that are expected to expire between 2032 and 2033. Inaddition, we have several pending patent applications covering GMI-1271 and/or methods of using it, the last expiring ofwhich, if issued, currently would be predicted to expire in 2037. We also rely on trade secret protection for our confidentialand proprietary information and careful monitoring of such information to protect aspects of our business.Our success will depend significantly on our ability to obtain and maintain patent and other proprietary protection forcommercially important inventions and know-how related to our business, defend and enforce our patents, preserve theconfidentiality of our trade secrets and operate without infringing the valid and enforceable patents and other proprietaryrights of third parties. We also rely on know-how and continuing technological innovation to develop, strengthen andmaintain our proprietary position in the field of glycomimetics.A third party may hold intellectual property, including patent rights that are important or necessary to the developmentof our drug candidates. It may be necessary for us to use the patented or proprietary technology of third parties tocommercialize our drug candidates, in which case we would be required to obtain a license from these third parties. If we arenot able to obtain such a license, or are not able to obtain such a license on commercially reasonable terms, our businesscould be materially harmed.We plan to continue to expand our intellectual property estate by filing patent applications directed to additionalglycomimetic compounds and their derivatives, compositions and formulations containing them and methods of using them.Additionally, we will seek patent protection in the United States and internationally for novel compositions of mattercovering the compounds and their use in a variety of therapies.14 Table of ContentsThe patent positions of biotechnology companies like us are generally uncertain and involve complex legal, scientificand factual questions. In addition, the coverage claimed in a patent application can be significantly reduced before thepatent is issued, and its scope can be reinterpreted after issuance, including where a reissue application is filed in relation toan issued patent to correct issues or errors arising during prosecution that may render claims of the issued patent eitherwholly or partially invalid or unenforceable. Consequently, we do not know whether any of our drug candidates will beprotectable or remain protected by enforceable patents. We cannot predict whether the patent applications we are currentlypursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficientproprietary protection from competitors. Any patents that we hold may be challenged, circumvented or invalidated by thirdparties.Because patent applications in the United States and certain other jurisdictions are maintained in secrecy for 18months, and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, wecannot be certain of the priority of inventions covered by pending patent applications. Moreover, we may have to participatein interference proceedings declared by the U.S. Patent and Trademark Office, or USPTO, or a foreign patent office todetermine priority of invention or in post-grant challenge proceedings, such as oppositions, that challenge priority ofinvention or other features of patentability. Such proceedings could result in substantial cost, even if the eventual outcome isfavorable to us.ManufacturingWe do not have any manufacturing facilities or personnel. We currently rely, and expect to continue to rely, on thirdparties for the manufacturing of our drug candidates for preclinical and clinical testing, as well as for commercialmanufacturing if our drug candidates receive marketing approval.In the case of rivipansel, the initial process development, manufacturing and scale-up was managed by us andperformed under contract by third parties. Under our license agreement with Pfizer, responsibility for manufacturingrivipansel has now transferred to Pfizer. With respect to our other drug candidates, we anticipate continuing to manageprocess development, scale-up and manufacturing under contracts with third parties. For GMI-1271, we expect a significantincrease in manufacturing as we scale up for our planned Phase 3 clinical trial and prepare for potential filings for marketingapproval.All of our drug candidates are small molecules and are manufactured in reliable and reproducible synthetic processesfrom readily available starting materials. The chemistry does not require unusual equipment in the manufacturing process.We expect to continue to develop drug candidates that can be produced cost-effectively at contract manufacturing facilities.CommercializationWe have not yet established a sales, marketing or drug distribution infrastructure. With the exception of rivipansel, towhich we have granted Pfizer exclusive commercialization rights, we generally expect to retain commercial rights in theUnited States for our current drug candidates, all of which are still in preclinical or early clinical development. We believethat it will be possible for us to access the U.S. market for those drug candidates through a focused, specialized sales force.Subject to receiving marketing approvals, we expect to commence commercialization activities by building a focusedsales and marketing organization in the United States to sell our drugs. We believe that such an organization will be able totarget the community of physicians who are the key specialists in treating the patient populations for which our drugcandidates are being developed. Outside the United States, we expect to enter into distribution and other marketingarrangements with third parties for any of our drug candidates that obtain marketing approval.We also plan to build a marketing and sales management organization to create and implement marketing strategies forany drugs that we market through our own sales organization and to oversee and support our sales force. The responsibilitiesof the marketing organization would include developing educational initiatives with respect to approved drugs andestablishing relationships with thought leaders in relevant fields of medicine.15 Table of ContentsCompetitionThe biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intensecompetition and a strong emphasis on proprietary drugs. While we believe that our knowledge, experience and scientificresources provide us with competitive advantages, we face potential competition from many different sources, includingmajor pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmentalagencies and public and private research institutions. Any drug candidates that we successfully develop and commercializewill compete with existing therapies and new therapies that may become available in the future. The key competitive factors affecting the success of all of our drug candidates, if approved, are likely to be their safety,efficacy, convenience, price, the level of generic competition and the availability of coverage and reimbursement fromgovernment and other third-party payors. Rivipansel: Sickle Cell Disease Hydroxyurea and Endari are approved as prophylactic therapies for SCD. Based on publicly available information, weare not aware of any drugs currently approved in the United States as “on-demand” (as needed) for the treatment of SCDpatients experiencing an acute VOC episode. There are a number of compounds that are in Phase 2 or Phase 3 clinicaldevelopment as either prophylactic or gene therapy/blood transfusion approaches to treat patients with SCD, including: ·Prophylactic Approaches: Novartis Pharmaceuticals Corporation (crizanlizumab, formerly SelG1); BaxterInternational (Aes-103); and Global Blood Therapeutics (voxelotor, formerly GBT440); and ·Gene Therapy/Blood Transfusion Approaches: Blue Bird Bio (Lentiglobin BB305); SangamoBiosciences/Bioverativ (ZFN Knockout); and Bellicum Pharmaceuticals (BPX-501). Attempts to develop a cure for SCD through gene therapy remain at an early stage of development, with significantvariability observed to date in achieving target levels of anti-sickling hemoglobin. Should one or more of these prophylacticagents or gene therapy approaches be commercialized prior to rivipansel, they could reduce the number of VOC episodeseach year, reducing the market opportunity for rivipansel. GMI-1271: AML and MM Our drug discovery, development and commercialization activities in oncology face, and will continue to face, intensecompetition from organizations such as pharmaceutical and biotechnology companies, as well as academic and researchinstitutions and government agencies. As the treatment landscape for AML and MM changes, there is substantial risk thatGMI-1271 might not provide additional benefit over other therapies. The following four new therapies were approved by the FDA for the treatment of AML in 2017: ·RYDAPT® (midostaurin), an oral prescription medicine commercialized by Novartis to be used incombination with certain chemotherapy medicines to treat adults with newly diagnosed AML who have adefect in a gene called FLT3;·IDHIFA® (enasidenib), a prescription medicine commercialized by Celgene intended to treat people withAML with an isocitrate dehydrogenase-2 (IDH2) mutation whose disease has come back or has not improvedafter previous treatments;·VYXEOS (daunorubicin and cytarabine), commercialized by Jazz Pharmaceuticals, which is indicated for thetreatment of adults with newly-diagnosed therapy-related AML (t-AML) or AML with myelodysplasia-relatedchanges (AML-MRC); and·Mylotarg (gemtuzumab ozogamicin), commercialized by Pfizer, which is indicated for the treatment for thetreatment of newly-diagnosed CD33-positive AML in adults (in combination with daunorubicin andcytarabine) and for treatment of relapsed or refractory CD33-positive AML in adults and in pediatric patients 2years and older as a stand-alone treatment.16 TM Table of Contents While many chemotherapies in development for hematologic malignancies will likely be complementary to GMI-1271,there are also therapies in development that could be directly competitive with GMI-1271. In particular, there are a number ofCXCR4 antagonists in clinical development that target the bone marrow microenvironment in order to mobilize andsensitize cancer cells to chemotherapy, including candidates developed by Sanofi-Aventis (Mozobil), Bristol Myers Squibb(BMS-936564), NOXXON Pharma (NOX-A12), Eli Lilly (LY2510924) and BioLine RX (BL-8040).Many of the companies against which we are competing, or against which we may compete in the future, havesignificantly greater financial resources and expertise in research and development, manufacturing, preclinical testing,conducting clinical trials, obtaining regulatory approvals and marketing approved drugs than we do. Mergers andacquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentratedamong a smaller number of our competitors. Smaller or early stage companies may also prove to be significant competitors,particularly through collaborative arrangements with large and established companies. These competitors also compete withus in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patientregistration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.Government Regulation and Product ApprovalGovernment authorities in the United States, at the federal, state and local levels, and in other countries, extensivelyregulate, among other things, the research, development, testing, manufacture, packaging, storage, recordkeeping, labeling,advertising, promotion, distribution, marketing, import and export of pharmaceutical products, such as those we aredeveloping. The processes for obtaining regulatory approvals in the United States and in foreign countries, along withsubsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financialresources.United States Government RegulationIn the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and itsimplementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriatefederal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.Failure to comply with the applicable United States requirements at any time during the drug development process, approvalprocess or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’srefusal to approve pending new drug applications, or NDAs, withdrawal of an approval, imposition of a clinical hold,issuance of warning or untitled letters, product recalls, product seizures, total or partial suspension of production ordistribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.The process required by the FDA before a drug may be marketed in the United States generally involves:·completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’sgood laboratory practice, or GLP, regulations;·submission to the FDA of an IND, which must become effective before human clinical trials may begin;·approval by an independent institutional review board, or IRB, at each clinical site before each trial may beinitiated;·performance of human clinical trials, including adequate and well-controlled clinical trials, in accordance withgood clinical practices, or GCP, to establish the safety and efficacy of the proposed drug for each indication;·submission to the FDA of an NDA;·satisfactory completion of an FDA advisory committee review, if applicable;·satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product isproduced to assess compliance with current good manufacturing practices, or cGMP, and to assure that the17 Table of Contentsfacilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, as wellas satisfactory completion of an FDA inspection of selected clinical sites to determine GCP compliance; and·FDA review and approval of the NDA.Preclinical StudiesPreclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animalstudies to assess potential safety and efficacy. An IND sponsor must submit the results of the preclinical studies, together withmanufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA aspart of an IND. Some preclinical testing may continue even after the IND is submitted. An IND automatically becomeseffective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or moreproposed clinical trials and places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA mustresolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in theFDA allowing clinical trials to commence.Clinical TrialsClinical trials involve the administration of the investigational new drug to human subjects under the supervision ofqualified investigators in accordance with GCP requirements, which include the requirement that all research subjectsprovide their informed consent in writing for their participation in any clinical trial. Clinical trials are conducted underprotocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety and theeffectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must besubmitted to the FDA as part of the IND. In addition, an IRB at each institution participating in the clinical trial must reviewand approve the plan for any clinical trial before it commences at that institution, and the IRB must continue to oversee theclinical trial while it is being conducted. Information about certain clinical trials must be submitted within specifictimeframes to the National Institutes of Health, or NIH, for public dissemination on their ClinicalTrials.gov website.Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined. In Phase1, the drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested forsafety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an initial indication of itseffectiveness. In Phase 2, the drug typically is administered to a limited patient population to identify possible adverseeffects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determinedosage tolerance and optimal dosage. In Phase 3, the drug is administered to an expanded patient population, generally atgeographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluatethe safety and efficacy of the product for approval, to establish the overall risk-benefit profile of the product and to provideadequate information for the labeling of the product.Progress reports detailing the results of the clinical trials must be submitted, at least annually, to the FDA, and morefrequently if serious adverse events occur. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfullywithin any specified period, or at all. Furthermore, the FDA or the sponsor may suspend or terminate a clinical trial at anytime on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk.Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not beingconducted in accordance with the IRB’s requirements, or if the drug has been associated with unexpected serious harm topatients.A sponsor may request a Special Protocol Assessment, or SPA, the purpose of which is to reach agreement with theFDA on the Phase 3 clinical trial protocol design and analysis that will form the primary basis of an efficacy claim. Accordingto FDA’s published guidance on the SPA process, a sponsor that meets the prerequisites may make a specific request for anSPA and provide information regarding the design and size of the proposed clinical trial. The FDA is supposed to evaluatethe protocol within 45 days of the request to assess whether the protocol design and planned analysis of the trial areacceptable to support regulatory approval of the product candidate with respect to effectiveness of the indication studied,and that evaluation may result in discussions and a request for additional information. An SPA request must be made beforethe proposed trial begins, and all open issues must be resolved before the trial begins for an18 Table of ContentsSPA to be approved. If a written agreement is reached, it will be documented in an SPA letter or the minutes of a meetingbetween the sponsor and the FDA and made part of the administrative record. Even if the FDA agrees to the design, execution and analyses proposed in protocols reviewed under the SPA process,the FDA may revoke or alter its agreement under the following circumstances:·public health concerns emerge that were unrecognized at the time of the protocol assessment, or the director ofthe review division determines that a substantial scientific issue essential to determining safety or efficacy hasbeen identified after testing has begun;·a sponsor fails to follow a protocol that was agreed upon with the FDA; or·the relevant data, assumptions, or information provided by the sponsor in a request for SPA change, are found tobe false statements or misstatements, or are found to omit relevant facts.A documented SPA may be modified, and such modification will be deemed binding on the FDA review division,except under the circumstances described above, if the FDA and the sponsor agree in writing to modify the protocol and suchmodification is intended to improve the study. An SPA, however, does not guarantee that a trial will be successful.Marketing ApprovalAssuming successful completion of the required clinical testing, the results of the preclinical and clinical studies,together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, amongother things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or moreindications. In most cases, the submission of an NDA is subject to a substantial application user fee. Under the PrescriptionDrug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has agreed to certain performance goalsregarding the timing of its review of an application.In addition, under the Pediatric Research Equity Act, an NDA or supplement to an NDA must contain data that areadequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatricsubpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe andeffective. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or allpediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric datarequirements. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphandesignation.The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, plan to mitigate anyidentified or suspected serious risks. The REMS plan could include medication guides, physician communication plans,assessment plans and elements to assure safe use, such as restricted distribution methods, patient registries or other riskminimization tools.The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them forfiling, to determine whether they are sufficiently complete to permit substantive review. The FDA may request additionalinformation rather than accept an NDA for filing. In this event, the application must be resubmitted with the additionalinformation. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission isaccepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDA to determine, among otherthings, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged orheld meets standards designed to assure the product’s continued safety, quality and purity.The FDA typically refers questions regarding novel drugs to an external advisory committee. An advisory committee isa panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides arecommendation as to whether the application should be approved and under what conditions. The FDA is not bound by therecommendations of an advisory committee, but it considers such recommendations carefully when making decisions.19 Table of ContentsBefore approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured.The FDA will not approve an application unless it determines that the manufacturing processes and facilities are incompliance with cGMP requirements and adequate to assure consistent production of the product within requiredspecifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical trial sites toassure compliance with GCP.The testing and approval process for an NDA requires substantial time, effort and financial resources, and takes severalyears to complete. Data obtained from preclinical and clinical testing are not always conclusive and may be susceptible tovarying interpretations, which could delay, limit or prevent regulatory approval. The FDA may not grant approval of an NDAon a timely basis, or at all.After evaluating the NDA and all related information, including the advisory committee recommendation, if any, andinspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, insome cases, a complete response letter. A complete response letter generally contains a statement of specific conditions thatmust be met in order to secure final approval of the NDA and may require additional clinical or preclinical testing in order forFDA to reconsider the application. Even with submission of this additional information, the FDA ultimately may decide thatthe application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’ssatisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drugwith specific prescribing information for specific indications.Special FDA Expedited Review and Approval ProgramsThe FDA has various programs, including fast track designation, accelerated approval, priority review, andbreakthrough therapy designation, which are intended to expedite or simplify the process for the development and FDAreview of drugs that are intended for the treatment of serious or life threatening diseases or conditions and demonstrate thepotential to address unmet medical needs. The purpose of these programs is to provide important new drugs to patients earlierthan under standard FDA review procedures.To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product isintended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmetmedical need. The FDA will determine that a product will fill an unmet medical need if it will provide a therapy where noneexists or provide a therapy that may be potentially superior to existing therapy based on efficacy or safety factors. The FDAmay review sections of the NDA for a fast track product on a rolling basis before the complete application is submitted, if thesponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA anddetermines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section ofthe NDA.The FDA may give a priority review designation to drugs that offer major advances in treatment, or provide a treatmentwhere no adequate therapy exists. A priority review means that the goal for the FDA to review an application is six months,rather than the standard review of ten months under current PDUFA guidelines. These six and ten month review periods aremeasured from the “filing” date rather than the receipt date for NDAs for new molecular entities, which typically addsapproximately two months to the timeline for review and decision from the date of submission. Most products that areeligible for fast track designation are also likely to be considered appropriate to receive a priority review.In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and thatprovide meaningful therapeutic benefit over existing treatments may be eligible for accelerated approval and may beapproved on the basis of adequate and well-controlled clinical trials establishing that the drug product has an effect on asurrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlierthan irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality orother clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack ofalternative treatments. As a condition of approval, the FDA may require a sponsor of a drug receiving accelerated approval toperform post-marketing studies to verify and describe the predicted effect on irreversible morbidity or mortality or otherclinical endpoint, and the drug may be subject to accelerated withdrawal procedures.20 Table of ContentsA sponsor can also request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy isdefined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threateningdisease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvementover existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early inclinical development. Drugs designated as breakthrough therapies are also eligible for accelerated approval. The FDA musttake certain actions, such as holding timely meetings and providing advice, intended to expedite the development andreview of an application for approval of a breakthrough therapy.Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longermeets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. Wemay explore some of these opportunities for our product candidates as appropriate.Post-Approval RequirementsDrugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation bythe FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling anddistribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changesto the approved product, such as adding new indications, manufacturing changes or other labeling claims, are subject tofurther testing requirements and prior FDA review and approval. There also are continuing annual user fee requirements forany marketed products, as well as application fees for supplemental applications with clinical data.Even if the FDA approves a product, it may limit the approved indications for use of the product, require thatcontraindications, warnings or precautions be included in the product labeling, including a boxed warning, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testingand surveillance programs to monitor the product after commercialization, or impose other conditions, including distributionrestrictions or other risk management mechanisms under a REMS, which can materially affect the potential market andprofitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs.In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs arerequired to register their establishments with the FDA and state agencies, and are subject to periodic unannouncedinspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturingprocess are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also requireinvestigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon thesponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue toexpend time, money and effort in the area of production and quality control to maintain cGMP compliance.Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements andstandards is not maintained or if problems occur after the product reaches the market.Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity orfrequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatoryrevisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assessnew safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequencesinclude, among other things:·restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from themarket or product recalls;·fines, warning letters or holds on post-approval clinical trials;·refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation ofproduct license approvals;·product seizure or detention, or refusal to permit the import or export of products; or·injunctions or the imposition of civil or criminal penalties.21 Table of ContentsThe FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market.Although physicians, in the practice of medicine, may prescribe approved drugs for unapproved indications, pharmaceuticalcompanies generally are required to promote their drug products only for the approved indications and in accordance withthe provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting thepromotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject tosignificant liability.In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act,or PDMA, which regulates the distribution of drugs and drug samples at the federal level, and sets minimum standards for theregistration and regulation of drug distributors by the states. Both the PDMA and state laws limit the distribution ofprescription pharmaceutical product samples and impose requirements to ensure accountability in distribution.Federal and State Fraud and Abuse, Data Privacy and Security, and Transparency Laws and RegulationsIn addition to FDA restrictions on marketing of pharmaceutical products, federal and state healthcare laws andregulations restrict business practices in the biopharmaceutical industry. These laws include anti-kickback and false claimslaws and regulations, data privacy and security, and transparency laws and regulations.The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, solicitingor receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for or recommending thepurchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.The term “remuneration” has been broadly interpreted to include anything of value. The Anti-Kickback Statute has beeninterpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers andformulary managers on the other. Although there are a number of statutory exemptions and regulatory safe harbors protectingsome common activities from prosecution, the exemptions and safe harbors are drawn narrowly. Practices that involveremuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject toscrutiny if they do not qualify for an exemption or safe harbor. Several courts have interpreted the statute’s intentrequirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federalhealthcare covered business, the statute has been violated.The reach of the federal Anti-Kickback Statute was also broadened by the Patient Protection and Affordable Care Act of2010, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively PPACA, which, among otherthings, amended the intent requirement of the federal Anti-Kickback Statute such that a person or entity no longer needs tohave actual knowledge of this statute or specific intent to violate it in order to have committed a violation. In addition,PPACA provides that the government may assert that a claim including items or services resulting from a violation of thefederal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act or thecivil monetary penalties statute, which imposes penalties against any person who is determined to have presented or causedto be presented a claim to a federal health program that the person knows or should know is for an item or service that was notprovided as claimed or is false or fraudulent.Federal false claims laws, including the federal civil False Claims Act prohibits any person from knowingly presenting,or causing to be presented, a false claim for payment to the federal government or knowingly making, using or causing to bemade or used a false record or statement material to a false or fraudulent claim to the federal government. A claim includes“any request or demand” for money or property presented to the U.S. government. Several pharmaceutical and otherhealthcare companies have been prosecuted under these laws for allegedly providing free product to customers with theexpectation that the customers would bill federal programs for the product. Other companies have been prosecuted forcausing false claims to be submitted because of the companies’ marketing of products for unapproved, and thus non-reimbursable, uses. The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additionalfederal criminal statutes that prohibit, among other things, knowingly and willfully executing a scheme to defraud anyhealthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing orcovering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the deliveryof or payment for healthcare benefits, items or services. Also, many states have similar fraud and abuse statutes or regulationsthat apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless ofthe payor.22 Table of ContentsIn addition, we may be subject to data privacy and security regulation by both the federal government and the states inwhich we conduct our business. HIPAA, as amended by the Health Information Technology for Economic and ClinicalHealth Act, or HITECH, and their respective implementing regulations, including the Final HIPAA Omnibus Rule publishedon January 25, 2013, imposes specified requirements on certain types of individuals and entities relating to the privacy,security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’ssecurity standards directly applicable to “business associates,” defined as independent contractors or agents of coveredentities that create, receive, maintain or transmit protected health information in connection with providing a service for oron behalf of a covered entity. HITECH also increased the civil and criminal penalties that may be imposed against coveredentities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions fordamages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated withpursuing federal civil actions. In addition, state laws govern the privacy and security of health information in certaincircumstances, many of which are not pre-empted by HIPAA, differ from each other in significant ways and may not have thesame effect, thus complicating compliance efforts.The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medicalsupplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specificexceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments orother transfers of value made to physicians and teaching hospitals, and applicable manufacturers and applicable grouppurchasing organizations to report annually to CMS ownership and investment interests held by the physicians and theirimmediate family members.We may also be subject to state laws that require pharmaceutical companies to comply with the pharmaceuticalindustry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government,as well as state laws that require drug manufacturers to report information related to payments and other transfers of value tophysicians and other healthcare providers or marketing expenditures.Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possiblethat some of our business activities could be subject to challenge under one or more of such laws. If our operations are foundto be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us,we may be subject to penalties, including criminal and significant civil monetary penalties, damages, fines, individualimprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement orsimilar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm,diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs andthe curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business andour results of operations. To the extent that any of our products are sold in a foreign country, we may be subject to similarforeign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safetysurveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments ortransfers of value to healthcare professionals.Coverage and ReimbursementThe future commercial success of our drug candidates or any of our collaborators’ ability to commercialize anyapproved drug candidates successfully will depend in part on the extent to which governmental payor programs at the federaland state levels, including Medicare and Medicaid, private health insurers and other third-party payors provide coverage forand establish adequate reimbursement levels for our drug candidates. Government health administration authorities, privatehealth insurers and other organizations generally decide which drugs they will pay for and establish reimbursement levels forhealthcare. In particular, in the United States, private health insurers and other third-party payors often providereimbursement for products and services based on the level at which the government, through the Medicare or Medicaidprograms, provides reimbursement for such treatments. In the United States, the EU and other potentially significant marketsfor our drug candidates, government authorities and third party payors are increasingly attempting to limit or regulate theprice of medical products and services, particularly for new and innovative products and therapies, which often has resultedin average selling prices lower than they would otherwise be. Further, the increased emphasis on managed healthcare in theUnited States and on country and regional pricing and reimbursement controls in the EU will put additional pressure onproduct pricing, reimbursement and usage, which may adversely affect our future product sales and results of operations.These pressures can arise from rules and practices of managed care23 Table of Contentsgroups, judicial decisions and laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceuticalcoverage and reimbursement policies and pricing in general.Third-party payors are increasingly imposing additional requirements and restrictions on coverage and limitingreimbursement levels for medical products. For example, federal and state governments reimburse covered prescription drugsat varying rates generally below average wholesale price. These restrictions and limitations influence the purchase ofhealthcare services and products. Third-party payors may limit coverage to specific drug products on an approved list, orformulary, which might not include all of the FDA-approved drug products for a particular indication. Third-party payors areincreasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products andservices, in addition to their safety and efficacy. We may need to conduct expensive pharmacoeconomic studies in order todemonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain the FDAapprovals. Our drug candidates may not be considered medically necessary or cost-effective. A payor’s decision to providecoverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further, one payor’sdetermination to provide coverage for a drug product does not assure that other payors will also provide coverage for thedrug product. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient torealize an appropriate return on our investment in drug development. Legislative proposals to reform healthcare or reducecosts under government insurance programs may result in lower reimbursement for our drugs and drug candidates orexclusion of our drugs and drug candidates from coverage. The cost containment measures that healthcare payors andproviders are instituting and any healthcare reform could significantly reduce our revenues from the sale of any approveddrug candidates. We cannot provide any assurances that we will be able to obtain and maintain third party coverage oradequate reimbursement for our drug candidates in whole or in part.Impact of Healthcare Reform on our BusinessThe United States and some foreign jurisdictions are considering enacting or have enacted a number of additionallegislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our productsprofitably. Among policy makers and payors in the United States and elsewhere, there is significant interest in promotingchanges in healthcare systems with the stated goals of containing healthcare costs, improving quality and expanding access.In the United States, the pharmaceutical industry has been a particular focus of these efforts, which include major legislativeinitiatives to reduce the cost of care through changes in the healthcare system, including limits on the pricing, coverage, andreimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded health careprograms, and increased governmental control of drug pricing. There have been several U.S. government initiatives over the past few years to fund and incentivize certaincomparative effectiveness research, including creation of the Patient-Centered Outcomes Research Institute under PPACA.Although the results of the comparative effectiveness studies are not intended to mandate coverage policies for public orprivate payors, it is not clear what effect, if any, the research will have on the sales of any product, if any such product or thecondition that it is intended to treat is the subject of a study. It is also possible that comparative effectiveness researchdemonstrating benefits in a competitor’s product could adversely affect the sales of our product candidates. If third-partypayors do not consider our drug candidates to be cost-effective compared to other available therapies, they may not cover ourdrug candidates, once approved, as a benefit under their plans or, if they do, the level of payment may not be sufficient toallow us to sell our drugs on a profitable basis. PPACA became law in March 2010 and substantially changed the wayhealthcare is financed by both governmental and private insurers. Among other measures that may have an impact on ourbusiness, PPACA establishes an annual, nondeductible fee on any entity that manufactures or imports specified brandedprescription drugs and biologic agents; a new Medicare Part D coverage gap discount program; and a new formula thatincreases the rebates a manufacturer must pay under the Medicaid Drug Rebate Program. Additionally, PPACA extendsmanufacturers’ Medicaid rebate liability, expands eligibility criteria for Medicaid programs, and expands entities eligible fordiscounts under the Public Health Service pharmaceutical pricing program. At this time, we are unsure of the full impact thatPPACA will have on our business. There have been judicial and Congressional challenges to certain aspects of PPACA, aswell as recent efforts by the Trump administration to repeal or replace certain aspects of the PPACA, and we expect suchchallenges and amendments to continue.Since January 2017, President Trump has signed two Executive Orders designed to delay the implementation of anycertain provisions of the PPACA or otherwise circumvent some of the requirements for health insurance mandated by thePPACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the PPACA.While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of24 Table of Contentscertain taxes under the PPACA have been signed into law. The Tax Cuts and Jobs Act of 2017 includes a provision repealing,effective January 1, 2019, the tax-based shared responsibility payment imposed by the PPACA on certain individuals whofail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”.Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018that delayed the implementation of certain PPACA-mandated fees, including the so-called “Cadillac” tax on certain highcost employer-sponsored insurance plans, the annual fee imposed on certain health insurance providers based on marketshare and the medical device excise tax on non-exempt medical devices.In addition, there has been increasing legislative and enforcement interest in the United States with respect to specialtydrug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed federal andproposed and enacted state legislation designed to, among other things, bring more transparency to drug pricing, review therelationship between pricing and manufacturer patient programs, and reform government program reimbursementmethodologies for drugs. At the federal level, Congress and the Trump administration have each indicated that it willcontinue to seek new legislative and/or administrative measures to control drug costs. At the state level, legislatures areincreasingly passing legislation and implementing regulations designed to control pharmaceutical and biological productpricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketingcost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries andbulk purchasing.As a result of PPACA, Medicare payments are increasingly tied to quality of care and value measures, and reporting ofrelated data by providers such as physicians and hospitals. So called “value based reimbursement” measures may presentchallenges as well as potential opportunities for biopharmaceutical manufacturers. Medicare incentives for providers meetingcertain quality measures may ultimately prove beneficial for manufacturers that are able to establish that their products mayhelp providers to meet such measures. However, manufacturers’ ability to market their drug products based on quality orvalue is highly regulated and not always permissible. In addition, the potentially decreased Medicare reimbursement to thoseproviders that fail to adequately comply with quality reporting requirements could translate to decreased resources availableto purchase products and may negatively impact marketing or utilization of our drug candidates if they are approved formarketing. We cannot predict at this time what impact, if any, the longer-term shift towards value based reimbursement willhave on any of our drug candidates in either the Medicare program, or in any other third party payor programs that maysimilarly tie payment to provider quality.In addition, other legislative changes have been proposed and adopted since PPACA was enacted. In August 2011, thePresident signed into law the Budget Control Act of 2011, as amended, which, among other things, created the Joint SelectCommittee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select Committeeon Deficit Reduction did not achieve its targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021,triggering the legislation’s automatic reductions to several government programs. These reductions include aggregatereductions to Medicare payments to providers of up to 2% per fiscal year, which began in 2013 and, following passage of theBipartisan Budget Act of 2015, will continue through 2025 unless additional Congressional action is taken. In January 2013,President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicarepayments to several providers and increased the statute of limitations period for the government to recover overpayments toproviders from three to five years. These and other healthcare reform initiatives may result in additional reductions inMedicare and other healthcare funding.Exclusivity and Approval of Competing ProductsHatch-Waxman Patent ListingIn seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claimsthat cover the applicant’s product or a method of using the product. Upon approval of a drug, each of the patents listed in theapplication for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations,commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by potential competitors insupport of approval of an abbreviated new drug application, or ANDA, or 505(b)(2) NDA. Generally, an ANDA provides formarketing of a drug product that has the same active ingredients in the same strengths, dosage form and route ofadministration as the listed drug and has been shown to be bioequivalent through in vitro or in vivo testing or otherwise tothe listed drug. ANDA applicants are not required to conduct or submit results of preclinical or clinical tests to prove thesafety or efficacy of their drug product, other than the requirement for bioequivalence testing. Drugs approved in this way arecommonly referred to as “generic equivalents” to the listed drug, and can often25 Table of Contentsbe substituted by pharmacists under prescriptions written for the original listed drug. 505(b)(2) NDAs generally are submittedfor changes to a previously approved drug product, such as a new dosage form or indication.The ANDA or 505(b)(2) NDA applicant is required to certify to the FDA concerning any patents listed for the approvedproduct in the FDA’s Orange Book, except for patents covering methods of use for which the ANDA applicant is not seekingapproval. Specifically, the applicant must certify with respect to each patent that:·the required patent information has not been filed;·the listed patent has expired;·the listed patent has not expired, but will expire on a particular date and approval is sought after patentexpiration; or·the listed patent is invalid, unenforceable or will not be infringed by the new product.Generally, the ANDA or 505(b)(2) NDA cannot be approved until all listed patents have expired, except when theANDA or 505(b)(2) NDA applicant challenges a listed drug. A certification that the proposed product will not infringe thealready approved product’s listed patents or that such patents are invalid or unenforceable is called a Paragraph IVcertification. If the applicant does not challenge the listed patents or indicate that it is not seeking approval of a patentedmethod of use, the ANDA or 505(b)(2) NDA application will not be approved until all the listed patents claiming thereferenced product have expired.If the ANDA or 505(b)(2) NDA applicant has provided a Paragraph IV certification to the FDA, the applicant must alsosend notice of the Paragraph IV certification to the NDA and patent holders once the application has been accepted for filingby the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of theParagraph IV certification. The filing of a patent infringement lawsuit within 45 days after the receipt of notice of theParagraph IV certification automatically prevents the FDA from approving the ANDA or 505(b)(2) NDA until the earlier of 30months, expiration of the patent, settlement of the lawsuit or a decision in the infringement case that is favorable to theANDA applicant.Hatch-Waxman Non-Patent ExclusivityMarket and data exclusivity provisions under the FDCA also can delay the submission or the approval of certainapplications for competing products. The FDCA provides a five-year period of non-patent data exclusivity within the UnitedStates to the first applicant to gain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDAhas not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsiblefor the activity of the drug substance. During the exclusivity period, the FDA may not accept for review an ANDA or a 505(b)(2) NDA submitted by another company that contains the previously approved active moiety. However, an ANDA or 505(b)(2) NDA may be submitted after four years if it contains a certification of patent invalidity or noninfringement.The FDCA also provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an existingNDA or 505(b)(2) NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored bythe applicant, are deemed by the FDA to be essential to the approval of the application or supplement. Three-year exclusivitymay be awarded for changes to a previously approved drug product, such as new indications, dosages, strengths or dosageforms of an existing drug. This three-year exclusivity covers only the conditions of use associated with the new clinicalinvestigations and, as a general matter, does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for genericversions of the original, unmodified drug product. Five-year and three-year exclusivity will not delay the submission orapproval of a full NDA; however, an applicant submitting a full NDA would be required to conduct or obtain a right ofreference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety andeffectiveness.Orphan Drug ExclusivityUnder the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat arare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in26 Table of Contentsthe United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation thatthe cost of developing and making a drug or biological product available in the United States for this type of disease orcondition will be recovered from sales of the product. Orphan designation must be requested before submitting an NDA orbiologics license application. Orphan designation does not convey any advantage in or shorten the duration of theregulatory review and approval process. We have received orphan drug designation for rivipansel and GMI-1271, and weintend to seek orphan drug designation and exclusivity for our other drug candidates whenever it is available.If a product that has orphan designation subsequently receives the first FDA approval for such drug for the disease orcondition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDAmay not approve any other applications to market the same drug or biological product for the same indication for sevenyears, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity.Competitors, however, may receive approval of different products for the indication for which the orphan product hasexclusivity or obtain approval for the same product but for a different indication for which the orphan product hasexclusivity. If a drug or biological product designated as an orphan product receives marketing approval for an indicationbroader than what is designated, it may not be entitled to orphan product exclusivity. Orphan drug status in the EU hassimilar, but not identical, benefits.Pediatric ExclusivityPediatric exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, providesfor the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity,including the non-patent and orphan drug exclusivity periods described above. This six-month exclusivity may be granted ifan NDA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do notneed to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairlyrespond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted toand accepted by FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or Orange Booklisted patent protection cover the drug are extended by six months. This is not a patent term extension, but it effectivelyextends the regulatory period during which the FDA cannot approve an ANDA or 505(b)(2) application owing to regulatoryexclusivity or listed patents. If any of our drug candidates is approved, we anticipate seeking pediatric exclusivity when it isappropriate.Foreign RegulationIn order to market any product outside of the United States, we would need to comply with numerous and varyingregulatory requirements of other countries regarding safety and efficacy and governing, among other things, clinical trials,marketing authorization, commercial sales and distribution of our drug candidates. For example, in the EU, we must obtainauthorization of a clinical trial application, or CTA, in each member state in which we intend to conduct a clinical trial.Whether or not we obtain FDA approval for a drug, we would need to obtain the necessary approvals by the comparableregulatory authorities of foreign countries before we can commence clinical trials or marketing of the drug in those countries.The approval process varies from country to country and can involve additional product testing and additionaladministrative review periods. The time required to obtain approval in other countries might differ from and be longer thanthat required to obtain FDA approval. Regulatory approval in one country does not ensure regulatory approval in another,but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.EmployeesAs of December 31, 2017, we had 40 full-time employees, all of whom are located in the United States. None of ouremployees is represented by a labor union or covered by a collective bargaining agreement. We consider our relationshipwith our employees to be good.Legal ProceedingsWe are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legalproceeding against us that we believe could have a material adverse effect on our business, operating results or financialcondition.27 Table of ContentsInformation about SegmentsWe operate only in one business segment. See “Note 2—Summary of Significant Accounting Policies—SegmentInformation” to our financial statements contained in Part II, Item 8 of this Annual Report.Customer Concentration and Geographic InformationWe did not have any material revenue for the years ending December 31, 2017 and 2016. Substantially all of ourrevenue for the year ended December 31, 2015 was derived from Pfizer and was earned in the United States. All of our long-lived assets are located in the United States. Corporate InformationWe were incorporated under the laws of the State of Delaware in April 2003 and commenced operations in May 2003.Our principal executive offices are located at 9708 Medical Center Drive, Rockville, Maryland 20850. Our telephonenumber is (240) 243-1201.Available InformationOur internet website address is www.glycomimetics.com. In addition to the information contained in this AnnualReport, information about us can be found on our website. Our website and information included in or linked to our websiteare not part of this Annual Report.Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments tothose reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, areavailable free of charge through our website as soon as reasonably practicable after they are electronically filed with orfurnished to the Securities and Exchange Commission, or SEC. The public may read and copy the materials we file with theSEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information onthe operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally the SEC maintains aninternet site that contains reports, proxy and information statements and other information. The address of the SEC’s websiteis www.sec.gov. ITEM 1A.RISK FACTORS Our business is subject to numerous risks. You should carefully consider the following risks, as well as general economicand business risks, and all of the other information contained in this Annual Report, together with any other documents wefile with the SEC. Any of the following risks could have a material adverse effect on our business, operating results andfinancial condition and cause the trading price of our common stock to decline.Risks Related to Our Financial Position and Capital NeedsWe have incurred significant losses since our inception. We expect to continue to incur losses over the next severalyears and may never achieve or maintain profitability.Since inception, we have incurred significant operating losses. As of December 31, 2017, we had an accumulateddeficit of $152.3 million. We have financed our operations to date with $64.1 million raised in private placements ofconvertible debt and convertible preferred stock, an aggregate of $57.5 million received from upfront and milestonepayments under our license agreement with Pfizer and $194.5 million from registered public offerings of our common stock.We have not generated any meaningful revenue since our inception other than from the upfront and milestone payments fromPfizer.We have devoted substantially all of our financial resources and efforts to research and development, includingpreclinical studies and clinical trials. We are still in the early stages of development of our drug candidates, and we have notcompleted development of any drugs. We expect to continue to incur significant expenses and operating losses over28 Table of Contentsthe next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. Althoughresponsibility for further development, regulatory approval and potential commercialization of our first drug candidate,rivipansel, has transferred to Pfizer under our collaboration with them following the completion of our Phase 2 clinical trial,we anticipate that our expenses will increase substantially as we:·conduct clinical trials of GMI-1271 in AML and MM;·conduct clinical trials of GMI-1359;·continue the research and development of our other drug candidates;·seek to discover and develop additional drug candidates;·seek regulatory approvals for any drug candidates that successfully complete clinical trials;·ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturingcapabilities to commercialize any drugs other than rivipansel for which we may obtain regulatory approval;·maintain, expand and protect our intellectual property portfolio;·hire additional clinical, quality control and scientific personnel;·add operational, financial and management information systems and personnel, including personnel to support ourdrug development and planned future commercialization efforts; and·incur additional legal, accounting and other expenses in operating as a public company.To become and remain profitable, we must succeed in developing and eventually commercializing drugs that generatesignificant revenue. This will require us to be successful in a range of challenging activities, including completingpreclinical testing and clinical trials of our drug candidates other than rivipansel, obtaining regulatory approval for thesedrug candidates and manufacturing and commercializing any drugs for which we may obtain regulatory approval, as well asdiscovering additional drug candidates. We are only in the preliminary stages of most of these activities. We may neversucceed in these activities and, even if we do, may never generate revenue that is significant enough to achieve profitability.In the case of rivipansel, our ability to generate revenue is dependent upon the achievement of development,regulatory and commercial milestones and sales sufficient to generate royalties under our license agreement with Pfizer, andthe achievement of such milestones is largely out of our control. If Pfizer fails, or chooses not to continue, to further develop,seek regulatory approval for or commercialize rivipansel, our ability to generate revenue with respect to rivipansel will besignificantly reduced or eliminated. Because all of our drug candidates other than rivipansel are still in preclinical or earlyclinical development, if we are unable to generate revenue from our license agreement with Pfizer, we may never becomeprofitable, and we may not be able to invest in the further development of our other drug candidates.Because of the numerous risks and uncertainties associated with drug development, we are unable to accurately predictthe timing or amount of increased expenses or when, or if, we will be able to achieve profitability. If we are required byregulatory authorities to perform studies in addition to those currently expected, or if there are any delays in completing ourclinical trials or the development of any of our drug candidates, our expenses could increase.Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annualbasis. Our failure to become and remain profitable would depress the value of our company and could impair our ability toraise capital, expand our business, maintain our research and development efforts or even continue our operations. A declinein the value of our company could also cause you to lose all or part of your investment.We will need substantial additional funding to pursue our business objectives. If we are unable to raise capital whenneeded, we could be forced to delay, reduce or eliminate our drug development programs or potential commercializationefforts.We believe that our cash and cash equivalents as of December 31, 2017 will enable us to fund our operating expensesand capital expenditure requirements at least through the end of 2019, without giving effect to any potential29 Table of Contentsmilestone payments we may receive under our agreement with Pfizer. However, we will need to obtain substantial additionalfunding in connection with our continuing operations. Our future capital requirements will depend on many factors,including:·our agreement with Pfizer remaining in effect and our ability to achieve milestones under this and any other licenseor collaboration agreement that we may enter into in the future;·the progress and results of the Phase 3 clinical trial of rivipansel;·the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our otherdrug candidates, including our ongoing and planned clinical trials of GMI-1271 and GMI-1359;·the number and development requirements of other drug candidates that we may pursue;·the costs, timing and outcome of regulatory review of our drug candidates;·the costs and timing of future commercialization activities, including product manufacturing, marketing, sales anddistribution, for any of our drug candidates other than rivipansel for which we receive marketing approval;·any royalties we receive from Pfizer with respect to sales of rivipansel, if it receives marketing approval;·the revenue, if any, received from commercial sales of our drug candidates other than rivipansel for which wereceive marketing approval;·the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing ourintellectual property rights and defending any intellectual property-related claims; and·the extent to which we acquire or in-license other drug candidates and technologies. Identifying potential drug candidates and conducting preclinical testing and clinical trials is a time consuming,expensive and uncertain process that takes years to complete, and we and Pfizer or any future collaborators may nevergenerate the necessary data or results required to obtain regulatory approval and achieve product sales. In addition, our drugcandidates, if approved, may not achieve commercial success. Our commercial revenue, if any, will be derived from the saleof drugs that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue torely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us onacceptable terms, or at all. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay,reduce or eliminate our research and development programs or any future commercialization efforts.Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquishrights to our drug candidates.Until such time, if ever, as we can generate substantial revenue from the sale of our drugs, we expect to finance our cashneeds through a combination of equity offerings, debt financings and license and development agreements. We do notcurrently have any committed external source of funds other than possible milestone payments and possible royalties underour license agreement with Pfizer. To the extent that we raise additional capital through the sale of equity or convertible debtsecurities, your ownership interest will be diluted, and the terms of these securities may include liquidation or otherpreferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, ifavailable, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such asincurring additional debt, making capital expenditures or declaring dividends.If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensingarrangements with third parties, we may be required to relinquish valuable rights to our research programs or drug candidatesor grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debtfinancings or other arrangements with third parties when needed, we may be required to delay, limit, reduce or terminate ourdrug development or future commercialization efforts or grant rights to third parties to develop and market drug candidatesthat we would otherwise prefer to develop and market ourselves.30 Table of ContentsOur operating history may make it difficult for you to evaluate the success of our business to date and to assess ourfuture viability.We commenced operations in 2003, and our operations to date have been largely focused on raising capital,developing our expertise in carbohydrate chemistry and knowledge of carbohydrate biology, identifying potential drugcandidates, undertaking preclinical studies and conducting clinical trials. We have three drug candidates in clinicaldevelopment, but we have not yet demonstrated our ability to successfully complete later stage clinical trials, obtainregulatory approvals, manufacture a commercial scale drug, or arrange for a third party to do so on our behalf, or conductsales and marketing activities necessary for successful commercialization. Consequently, any predictions you make aboutour future success or viability may not be as accurate as they could be if we had a longer operating history.We may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors inachieving our business objectives. With respect to our drug candidates other than rivipansel, we will need to transition atsome point from a company with a research and development focus to a company capable of supporting commercialactivities. We may not be successful in such a transition.We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarterand year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon theresults of any quarterly or annual periods as indications of future operating performance.The recently passed comprehensive tax reform bill could adversely affect our business and financial condition.On December 22, 2017, President Trump signed into law new legislation that significantly revises the Internal RevenueCode of 1986, as amended. The newly enacted federal income tax law, among other things, contains significant changes tocorporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%,limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses),limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operatingloss carrybacks, immediate deductions for certain new investments instead of deductions for depreciation expense over time,and modifying or repealing many business deductions and credits. Notwithstanding the reduction in the corporate incometax rate, the overall impact of the new federal tax law is uncertain and our business and financial condition could beadversely affected. In addition, it is uncertain if and to what extent various states will conform to the newly enacted federaltax law. The impact of this tax reform on holders of our common stock is also uncertain and could be adverse. We urge ourstockholders to consult with their legal and tax advisors with respect to this legislation and the potential tax consequences ofinvesting in or holding our common stock.Our ability to use net operating losses to offset future taxable income may be subject to limitations.As of December 31, 2017, we had federal and state net operating loss carryforwards of $112.0 million. The federal andstate net operating loss carryforwards will begin to expire, if not utilized, beginning in 2026. These net operating losscarryforwards could expire unused and be unavailable to offset future income tax liabilities. Under the newly enacted federalincome tax law, federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but thedeductibility of such federal net operating losses is limited. It is uncertain if and to what extent various states will conform tothe newly enacted federal tax law. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, andcorresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as agreater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may belimited. We could experience ownership changes in the future that would limit our ability to use our net operating losscarryforwards.Risks Related to the Discovery and Development of Our Drug CandidatesOur research and development is focused on discovering and developing novel glycomimetic drugs, and we aretaking an innovative approach to discovering and developing drugs, which may never lead to marketable drugs.A key element of our strategy is to use and expand our platform to build a pipeline of novel glycomimetic drugcandidates and progress these drug candidates through clinical development for the treatment of a variety of diseases. Thediscovery of therapeutic drugs based on molecules that mimic the structure of carbohydrates is an emerging field,31 Table of Contentsand the scientific discoveries that form the basis for our efforts to discover and develop drug candidates are relatively new.The scientific evidence to support the feasibility of developing drug candidates based on these discoveries is bothpreliminary and limited. Although our research and development efforts to date have resulted in a pipeline of glycomimeticdrug candidates, we may not be able to develop drug candidates that are safe and effective. Even if we are successful incontinuing to build our pipeline, the potential drug candidates that we identify may not be suitable for clinical development,including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely tobe drugs that will receive marketing approval and achieve market acceptance. If we do not successfully develop andcommercialize drug candidates based upon our glycomimetics platform, we will not be able to obtain product revenue infuture periods, which likely would result in significant harm to our financial position and adversely affect our stock price.We are very early in our development efforts and have only three drug candidates that are in clinical trials. All of ourother drug candidates are still in preclinical development. If we or our collaborators are unable to commercialize our drugcandidates or experience significant delays in doing so, our business will be materially harmed.We are very early in our development efforts and rivipansel, GMI-1271 and GMI-1359 are our only drug candidatesthat are in clinical trials. Our other drug candidates are still in preclinical development. We have not completed thedevelopment of any drug candidates, we currently generate no revenue from the sale of any drugs and we may never be ableto develop a marketable drug. We have invested substantially all of our efforts and financial resources in the development ofour glycomimetics platform, the identification of potential drug candidates using that platform and the development of ourdrug candidates. Other than with respect to rivipansel, for which our collaborator Pfizer now has the responsibility for furtherdevelopment and commercialization, our ability to generate revenue from our other drug candidates, which we do not expectwill occur for many years, if ever, will depend heavily on their successful development and eventual commercialization. Thesuccess of those drug candidates will depend on several factors, including:·successful completion of preclinical studies and clinical trials;·receipt of marketing approvals from applicable regulatory authorities;·obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our drug candidates;·making arrangements with third-party manufacturers for, or establishing, commercial manufacturing capabilities;·launching commercial sales of the drugs, if and when approved, whether alone or in collaboration with others;·acceptance of the drugs, if and when approved, by patients, the medical community and third-party payors;·effectively competing with other therapies;·obtaining and maintaining healthcare coverage and adequate reimbursement;·protecting our rights in our intellectual property portfolio; and·maintaining a continued acceptable safety profile of the drugs following approval.If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays oran inability to successfully commercialize our drug candidates, which would materially harm our business.Clinical drug development involves a lengthy and expensive process, with an uncertain outcome. We may incuradditional costs or experience delays in completing, or ultimately be unable to complete, the development andcommercialization of our drug candidates.All but three of our drug candidates are in preclinical development, and their risk of failure is high. It is impossible topredict when or if any of our drug candidates will prove safe or effective in humans or will receive regulatory approval.Before obtaining marketing approval from regulatory authorities for the sale of any drug candidate, we or a collaborator mustcomplete preclinical development and then conduct extensive clinical trials to demonstrate the safety32 Table of Contentsand efficacy of the drug candidate in humans. Clinical testing is expensive, difficult to design and implement, can take manyyears to complete and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage ofdevelopment. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinicaltrials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical data areoften susceptible to varying interpretations and analyses, and many companies that have believed their drug candidatesperformed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of theirdrugs.We or our current or future collaborators may experience numerous unforeseen events during, or as a result of, clinicaltrials that could delay or prevent our or their ability to receive marketing approval or commercialize our drug candidates,including:·regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial orconduct a clinical trial at a prospective trial site;·we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinicaltrial protocols with prospective trial sites;·clinical trials of our drug candidates may produce negative or inconclusive results, including failure todemonstrate statistical significance, and we may decide, or regulators may require us, to conduct additionalclinical trials or abandon drug development programs;·the number of patients required for clinical trials of our drug candidates may be larger than we anticipate,enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinicaltrials at a higher rate than we anticipate;·our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations tous in a timely manner, or at all;·regulators or institutional review boards may require that we or our investigators suspend or terminate clinicalresearch for various reasons, including noncompliance with regulatory requirements or a finding that theparticipants are being exposed to unacceptable health risks;·the cost of clinical trials of our drug candidates may be greater than we anticipate;·the supply or quality of our drug candidates or other materials necessary to conduct clinical trials of our drugcandidates may be insufficient or inadequate; and·our drug candidates may have undesirable side effects or other unexpected characteristics, causing us or ourinvestigators, regulators or institutional review boards to suspend or terminate the trials.If we are required to conduct additional clinical trials or other testing of our drug candidates beyond those that wecurrently contemplate, if we are unable to successfully complete clinical trials of our drug candidates or other testing, if theresults of these clinical trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:·be delayed in obtaining marketing approval for our drug candidates;·not obtain marketing approval at all;·obtain approval for indications or patient populations that are not as broad as intended or desired;·obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;·be subject to additional post-marketing testing requirements; or·have the drug removed from the market after obtaining marketing approval.Our drug development costs will also increase if we experience delays in testing or marketing approvals. We do notknow whether any of our preclinical studies or clinical trials will begin as planned, will need to be restructured or will becompleted on schedule, or at all. Significant preclinical study or clinical trial delays also could shorten any33 Table of Contentsperiods during which we may have the exclusive right to commercialize our drug candidates or allow our competitors tobring drugs to market before we do, and thereby impair our ability to successfully commercialize our drug candidates.If we or our collaborators experience delays or difficulties in the enrollment of patients in clinical trials, our receiptof necessary regulatory approvals could be delayed or prevented.We or our collaborators may not be able to initiate or continue clinical trials for our drug candidates if we are unable tolocate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similarregulatory authorities outside the United States. In particular, because our lead drug candidates are intended to treat patientswith orphan diseases such as sickle cell disease, AML and MM, our or our collaborators’ ability to enroll eligible patientsmay be limited or may result in slower enrollment than we anticipate. In addition, some of our competitors have ongoingclinical trials for drug candidates that treat the same or similar indications as our drug candidates, and patients who wouldotherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ drug candidates. Patientenrollment is also affected by other factors, including:·the severity of the disease or condition under investigation;·the eligibility criteria for the trial;·the perceived risks and benefits of the drug candidate;·the availability of drugs approved to treat the disease or condition under investigation;·the efforts to facilitate timely enrollment in clinical trials;·the patient referral practices of physicians;·the ability to monitor patients adequately during and after treatment; and·the proximity and availability of clinical trial sites for prospective patients.Our or our collaborators’ inability to enroll a sufficient number of patients for clinical trials would result in significantdelays and could require us or them to abandon one or more clinical trials altogether. Enrollment delays in these clinicaltrials may result in increased development costs for our drug candidates, which would cause the value of our company todecline and limit our ability to obtain additional financing.If serious adverse or unacceptable side effects are identified during the development of our drug candidates, we mayneed to abandon or limit the development of some of our drug candidates.If our drug candidates are associated with undesirable side effects in clinical trials or have characteristics that areunexpected, we may need to abandon their development or limit their development to more narrow uses or subpopulations inwhich the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefitperspective. Many drug candidates that initially showed promise in early stage testing have later been found to cause sideeffects that prevented their further development.We may expend our limited resources to pursue a particular drug candidate or indication and fail to capitalize ondrug candidates or indications that may be more profitable or for which there is a greater likelihood of success.Because we have limited financial and management resources, we focus on a limited number of research programs anddrug candidates. As a result, we may forego or delay pursuit of opportunities with other drug candidates or for otherindications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail tocapitalize on viable commercial drugs or profitable market opportunities. Our spending on current and future research anddevelopment programs and drug candidates for specific indications may not yield any commercially viable drugs. If we donot accurately evaluate the commercial potential or target market for a particular drug candidate, we may relinquish valuablerights to that drug candidate through collaboration, licensing or other arrangements in cases in which it would have beenmore advantageous for us to retain sole development and commercialization rights.34 Table of ContentsRisks Related to Our Dependence on Third PartiesOur success is highly dependent on our existing collaboration with Pfizer, and future collaborations may also beimportant to us. If we are unable to maintain any of these collaborations, or if these collaborations are not successful, ourbusiness could be adversely affected.We have limited capabilities for drug development and do not yet have any capabilities for sales, marketing ordistribution. Under our license agreement with Pfizer, Pfizer is responsible for all further development, regulatory approvaland potential commercialization efforts with respect to rivipansel. Other than rivipansel, GMI-1271 and GMI-1359, all of ourdrug candidates are still in preclinical development, and therefore our success is highly dependent on our collaboration withPfizer. We cannot assure you that Pfizer will continue to develop rivipansel in a timely manner, or at all, or, if it achievesregulatory approval, that Pfizer will successfully commercialize rivipansel.Our Pfizer collaboration, and any future collaborations we might enter into, may pose a number of risks, including:·collaborators have significant discretion in determining the efforts and resources that they will apply to thesecollaborations;·collaborators may not perform their obligations as expected;·collaborators may not pursue the commercialization of any drug candidates that achieve regulatory approval ormay elect not to pursue, continue or renew development or commercialization of drug candidates based on clinicaltrial results, changes in such collaborators’ strategic focus or available funding or external factors, such as anacquisition, that divert resources or create competing priorities;·collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trialor abandon a drug candidate, repeat or conduct new clinical trials or require a new formulation of a drug candidatefor clinical testing;·collaborators could experience delays in initiating or conducting clinical trials for any number of reasons;·collaborators could independently develop, or develop with third parties, drugs that compete directly or indirectlywith our drugs or drug candidates if such collaborators believe that competitive products are more likely to besuccessfully developed or can be commercialized under terms that are more economically attractive than ours;·drug candidates discovered in collaboration with us may be viewed by our collaborators as competitive with theirown drug candidates or drugs, which may cause such collaborators to cease to devote resources to thecommercialization of our drug candidates;·a collaborator with marketing and distribution rights to one or more of our drug candidates that achieve regulatoryapproval may not commit sufficient resources to the marketing and distribution of such drug or drugs;·disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or thepreferred course of development, might cause delays or termination of the research, development orcommercialization of drug candidates, might lead to additional responsibilities for us with respect to drugcandidates or might result in litigation or arbitration, any of which would be time consuming and expensive;·collaborators may not properly maintain or defend our or their intellectual property rights or may use our or theirproprietary information in such a way as to invite litigation that could jeopardize or invalidate such intellectualproperty or proprietary information or expose us to potential litigation;·collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation andpotential liability; and·collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be requiredto raise additional capital to pursue further development or commercialization of the applicable drug candidates.35 Table of ContentsIf our collaboration with Pfizer or any other collaborations we might enter into in the future do not result in thesuccessful development and commercialization of drugs, or if one of our collaborators terminates its agreement with us, wemay not receive any future research funding or milestone or royalty payments under the collaboration. In addition, even if weare eligible to receive these payments, they could be substantially delayed. For example, under our license agreement, Pfizerhas the option to commence another Phase 2 clinical trial of rivipansel, and such commencement would delay or inhibit ourability to receive some of the milestone payments we might otherwise have received under the agreement. If we do notreceive the funding we expect under these agreements, the development of our drug candidates could be delayed and we mayneed additional resources to develop our drug candidates. All of the risks relating to drug development, regulatory approvaland commercialization described in this report also apply to the activities of our collaborators.If Pfizer or a future collaborator of ours is involved in a business combination, the collaborator might deemphasize orterminate development or commercialization of any drug candidate licensed to it by us. If one of our collaborators terminatesits agreement with us, we may find it more difficult to attract new collaborators and our reputation in the business andfinancial communities could be adversely affected. For our drug candidates other than rivipansel, we may in the futuredetermine to collaborate with pharmaceutical and biotechnology companies for their development and potentialcommercialization. We face significant competition in seeking appropriate collaborators. Our ability to reach a definitiveagreement for a collaboration will depend, among other things, upon our assessment of a collaborator’s resources andexpertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number offactors. If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, wemay have to curtail the development of a drug candidate, reduce or delay its development or one or more of our otherdevelopment programs, delay its potential commercialization or reduce the scope of any sales or marketing activities orincrease our expenditures and undertake development or commercialization activities at our own expense. If we elect to fundand undertake development or commercialization activities on our own, we may need to obtain additional expertise andadditional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations anddo not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we maynot be able to further develop our drug candidates or bring them to market, which would impair our business prospects.We expect to rely on third parties to conduct our future clinical trials for drug candidates other than rivipansel, andthose third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials.We currently expect to engage a third-party contract research organization, or CRO, to conduct our ongoing andplanned clinical trials for GMI-1271 and GMI-1359 and any of our other drug candidates that may progress to clinicaldevelopment. We expect to continue to rely on third parties, such as CROs, clinical data management organizations, medicalinstitutions and clinical investigators, to conduct those clinical trials. Agreements with such third parties might terminate fora variety of reasons, including a failure to perform by the third parties. If we need to enter into alternative arrangements, thatwould delay our drug development activities. Our reliance on these third parties for research and development activities will reduce our control over these activities,but will not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of our clinicaltrials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requiresus to comply with standards, commonly referred to as good clinical practices, or GCPs, for conducting, recording andreporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights,integrity and confidentiality of trial participants are protected. We also are required to register ongoing clinical trials andpost the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within specifiedtimeframes. Failure to do so can result in fines, adverse publicity and significant civil and criminal sanctions.Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors.If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinicaltrials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed inobtaining, marketing approvals for our drug candidates and will not be able to, or may be delayed in our efforts to,successfully commercialize our drug candidates.36 Table of ContentsWe also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Anyperformance failure on the part of our distributors could delay clinical development or marketing approval of our drugcandidates or commercialization of our drugs, producing additional losses and depriving us of potential revenue.We contract with third parties for the manufacturing of some of our drug candidates for preclinical and clinicaltesting and expect to continue to do so for commercialization. This reliance on third parties increases the risk that we willnot have sufficient quantities of our drug candidates or drugs, or such quantities at an acceptable cost, which could delay,prevent or impair our development or commercialization efforts.We do not have any manufacturing facilities or personnel. For our drug candidates other than rivipansel, for whichmanufacturing responsibility has shifted to Pfizer, we rely, and expect to continue to rely, on third parties for themanufacturing of our drug candidates for preclinical and clinical testing, as well as for commercial manufacture if any of ourdrug candidates receive marketing approval. This reliance on third parties increases the risk that we will not have sufficientquantities of our drug candidates or drugs, or such quantities at an acceptable cost or quality, which could delay, prevent orimpair our ability to timely conduct our clinical trials or our other development or commercialization efforts.We also expect to rely on third-party manufacturers or third-party collaborators for the manufacturing of commercialsupply of any other drug candidates for which we or our collaborators obtain marketing approval. We may be unable toestablish any agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establishagreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:·reliance on the third party for regulatory compliance and quality assurance;·the possible breach of the manufacturing agreement by the third party;·the possible misappropriation of our proprietary information, including our trade secrets and know-how; and·the possible termination or non-renewal of the agreement by the third party at a time that is costly or inconvenientfor us.Third-party manufacturers may not be able to comply with current good manufacturing practices, or cGMP, regulationsor similar regulatory requirements outside the United States. Our failure, or the failure of our third-party manufacturers, tocomply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines,injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of drugcandidates or drugs, operating restrictions and criminal prosecutions, any of which could significantly and adversely affectsupplies of our drugs.In addition, in the event that any of our third-party manufacturers fails to comply with such requirements or to performits obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials becomeslimited or interrupted for other reasons, we may be forced to manufacture the materials ourselves, for which we currently donot have the capabilities or resources, or enter into an agreement with another third party, which we may not be able to do oncommercially reasonable terms, if at all. We do not currently have arrangements in place for redundant supply or a secondsource for bulk drug substance. If our current contract manufacturers cannot perform as agreed, we may be required to replacesuch manufacturers and we may incur added costs and delays in identifying and qualifying any such replacement. Anyreplacement of our manufacturers could require significant effort and expertise because there may be a limited number ofqualified replacements. If we are required to change manufacturers for any reason, we will be required to verify that the newmanufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations andguidelines. The delays associated with the verification of a new manufacturer could negatively affect our ability to developour drug candidates in a timely manner or within budget.Our current and anticipated future dependence upon others for the manufacturing of our drug candidates or drugs mayadversely affect our future profit margins and our ability to commercialize any drugs that receive marketing approval on atimely and competitive basis.37 Table of ContentsWe, or our third-party manufacturers, may be unable to successfully scale-up manufacturing of our drug candidatesin sufficient quality and quantity, which would delay or prevent us from conducting our ongoing and planned clinicaltrials and developing our drug candidates.In order to conduct our ongoing and planned clinical trials of our drug candidates, we will need to manufacture them inlarge quantities. We, or our manufacturing partners, may be unable to successfully increase the manufacturing capacity forany of our drug candidates in a timely or cost-effective manner, or at all. In addition, quality issues may arise during scale-upactivities. If we or our manufacturing partners are unable to successfully scale up the manufacture of our drug candidates insufficient quality and quantity, the development, testing and clinical trials of that drug candidate may be delayed or becomeinfeasible, and marketing approval or commercial launch of any resulting drug may be delayed or not obtained, which couldsignificantly harm our business.Risks Related to the Commercialization of Our Drug CandidatesEven if any of our drug candidates receives marketing approval, it may fail to achieve the degree of marketacceptance by physicians, patients, third-party payors and others in the medical community necessary for commercialsuccess.If any of our drug candidates receives marketing approval, it may nonetheless fail to gain sufficient market acceptanceby physicians, patients, third-party payors and others in the medical community. If our drug candidates do not achieve anadequate level of acceptance, we may not generate significant revenue from drug sales and we may not become profitable.The degree of market acceptance of our drug candidates, if approved for commercial sale, will depend on a number of factors,including:·the efficacy and potential advantages compared to alternative treatments;·our ability to offer our drugs for sale at competitive prices;·the convenience and ease of administration compared to alternative treatments;·the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;·the strength of marketing and distribution support;·the availability of third-party coverage and adequate reimbursement;·the prevalence and severity of any side effects; and·any restrictions on the use of our drugs together with other medications.If we are unable to establish sales, marketing and distribution capabilities for drug candidates other than rivipansel,we may not be successful in commercializing those drug candidates if and when they are approved.We do not have a sales or marketing infrastructure and have no experience in the sale, marketing or distribution ofpharmaceutical drugs. Under our collaboration with Pfizer, Pfizer is responsible for the commercialization of rivipansel, ourfirst drug candidate, if it receives regulatory approval. To achieve commercial success for any other drug candidate for whichwe may obtain marketing approval, we will need to establish a sales and marketing organization to market or co-promotesuch drugs. There are risks involved with establishing our own sales, marketing and distribution capabilities. For example,recruiting and training a sales force is expensive and time consuming and could delay any product launch. If the commerciallaunch of a drug candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occurfor any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly,and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.Factors that may inhibit our efforts to commercialize our drugs on our own include:·our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel;·the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians toprescribe any future drugs;38 Table of Contents·the lack of complementary drugs to be offered by sales personnel, which may put us at a competitive disadvantagerelative to companies with more products; and·unforeseen costs and expenses associated with creating an independent sales and marketing organization.If we are unable to establish our own sales, marketing and distribution capabilities and enter into arrangements withthird parties to perform these services, our revenue and our profitability, if any, are likely to be lower than if we were to sell,market and distribute any drugs that we develop ourselves. In addition, we may not be successful in entering intoarrangements with third parties to sell, market and distribute our drug candidates or may be unable to do so on terms that arefavorable to us. We likely will have little control over such third parties, and any of them may fail to devote the necessaryresources and attention to sell and market our drugs effectively. If we do not establish sales, marketing and distributioncapabilities successfully, either on our own or in collaboration with third parties, we will not be successful incommercializing our drug candidates.We face substantial competition, which may result in others discovering, developing or commercializing drugs beforeor more successfully than we do.The development and commercialization of new drugs is highly competitive. We face competition with respect to ourcurrent drug candidates, and we will face competition with respect to any drug candidates that we may seek to develop orcommercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies, biotechnologycompanies, academic institutions, governmental agencies and public and private research institutions. Should anycompetitors’ drug candidates receive regulatory or marketing approval prior to ours, they may establish a strong marketposition and be difficult to displace or diminish the need for our drug candidates. The key competitive factors affecting the success of all of our drug candidates, if approved, are likely to be their safety,efficacy, convenience, price, the level of generic competition and the availability of coverage and reimbursement fromgovernment and other third-party payors. As described above under “Business—Competition,” we expect that bothrivipansel and GMI-1271 will compete with approved therapies and those currently in development by other companies. Tothe extent that competitive drugs or drug candidates developed by others are successful in treating our target indications, itcould reduce the market opportunity for our drug candidates.Many of the companies against which we are competing, or against which we may compete in the future, havesignificantly greater financial resources and expertise in research and development, manufacturing, preclinical testing,conducting clinical trials, obtaining regulatory approvals and marketing approved drugs than we do. Mergers andacquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentratedamong a smaller number of our competitors. Smaller or early stage companies may also prove to be significant competitors,particularly through collaborative arrangements with large and established companies. These competitors also compete withus in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patientregistration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize drugs thatare safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any drugs thatwe may develop. Our competitors also may obtain FDA or other regulatory approval for their drugs more rapidly than we mayobtain approval for ours, which could result in our competitors establishing a strong market position before we are able toenter the market.In addition, because we have no patents with respect to our glycomimetics platform, our competitors may use ourmethods, or acquire similar expertise, in order to develop glycomimetic drug candidates and progress these drug candidatesthrough clinical development and commercialization, which could impair our ability to successfully commercialize our drugcandidates or otherwise limit our commercial opportunities.39 Table of ContentsEven if we or our collaborators are able to commercialize any of our drug candidates, the drugs may become subjectto unfavorable pricing regulations or third-party coverage and reimbursement policies.Our and our collaborators’ ability to commercialize any of our drug candidates successfully will depend, in part, on theextent to which coverage and adequate reimbursement for these drugs and related treatments will be available fromgovernment payor programs at the federal and state levels authorities, including Medicare and Medicaid, private healthinsurers, managed care plans and other organizations. Government authorities and third-party payors, such as private healthinsurers and health maintenance organizations, decide which medications they will pay for and establish reimbursementlevels. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particularmedications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discountsfrom list prices and are challenging the prices charged for drugs. Coverage and reimbursement may not be available for anydrug that we or our collaborators commercialize and, even if these are available, the level of reimbursement may not besatisfactory. Inadequate reimbursement levels may adversely affect the demand for, or the price of, any drug candidate forwhich we or our collaborators obtain marketing approval. Obtaining and maintaining adequate reimbursement for our drugsmay be difficult. We may be required to conduct expensive pharmacoeconomic studies to justify coverage andreimbursement or the level of reimbursement relative to other therapies. If coverage and adequate reimbursement are notavailable or reimbursement is available only to limited levels, we or our collaborators may not be able to successfullycommercialize any drug candidates for which marketing approval is obtained.There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coveragemay be more limited than the indications for which the drug is approved by the FDA or similar regulatory authorities outsidethe United States. Moreover, eligibility for coverage and reimbursement does not imply that a drug will be paid for in allcases or at a rate that covers our costs, including research, development, manufacture, sale and distribution expenses. Interimreimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be madepermanent. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may bebased on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for otherservices. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programsor private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they maybe sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and paymentlimitations in setting their own reimbursement policies. However, one payor’s determination to provide coverage for a drugdoes not assure that other payors will also provide coverage for the drug. Our or our collaborators’ inability to promptlyobtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved drugsthat we develop could adversely affect our operating results, our ability to raise capital needed to commercialize drugs andour overall financial condition.The regulations that govern marketing approvals, pricing, coverage and reimbursement for new drugs vary widely fromcountry to country. Current and future legislation may significantly change the approval requirements in ways that couldinvolve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drugbefore it can be marketed. In many countries, the pricing review period begins after marketing or licensing approval isgranted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental controleven after initial approval is granted. As a result, we or our collaborators might obtain marketing approval for a drug in aparticular country, but then be subject to price regulations that delay commercial launch of the drug, possibly for lengthytime periods, and negatively impact our ability to generate revenue from the sale of the drug in that country. Adverse pricinglimitations may hinder our ability to recoup our investment in one or more drug candidates, even if our drug candidatesobtain marketing approval.There can be no assurance that our drug candidates, if they are approved for sale in the United States or in othercountries, will be considered medically reasonable and necessary for a specific indication, that they will be considered cost-effective by third-party payors, that coverage or an adequate level of reimbursement will be available or that third-partypayors’ reimbursement policies will not adversely affect our ability to sell our drug candidates profitably if they are approvedfor sale.40 Table of ContentsProduct liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization ofany drugs that we may develop.We face an inherent risk of product liability exposure related to the testing of our drug candidates in human clinicaltrials, and will face an even greater risk if we commercially sell any drugs that we may develop. If we cannot successfullydefend ourselves against claims that our drug candidates or drugs caused injuries, we will incur substantial liabilities.Regardless of merit or eventual outcome, liability claims may result in:·decreased demand for any drug candidates or drugs that we may develop;·injury to our reputation and significant negative media attention;·withdrawal of clinical trial participants;·significant costs to defend the related litigation;·substantial monetary awards paid to trial participants or patients;·loss of revenue;·reduced resources of our management to pursue our business strategy; and·the inability to commercialize any drugs that we may develop.We currently hold $5.0 million of clinical trial insurance coverage in the aggregate for our clinical trials beingconducted in the United States, with a per incident limit of $5.0 million, which may not be adequate to cover all liabilitiesthat we may incur. In addition, we have increased our clinical coverage above this amount in foreign countries where we planto have sites as part of our clinical trials for GMI-1271, including Ireland, Australia, Denmark, Germany and England. Wemay need to further increase our insurance coverage as we expand our clinical trials or if we commence commercialization ofour drug candidates. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at areasonable cost or in an amount adequate to satisfy any liability that may arise.Risks Related to Our Intellectual PropertyIf we are unable to obtain and maintain patent protection for our drug candidates, or if the scope of the patentprotection obtained is not sufficiently broad, our competitors could develop and commercialize drug candidates similar oridentical to ours, and our ability to successfully commercialize our drug candidates may be impaired.Our success depends in large part on our ability to obtain and maintain patent protection in the United States and othercountries with respect to our drug candidates. We seek to protect our proprietary position by filing patent applications in theUnited States and abroad related to our drug candidates.The patent prosecution process is expensive and time consuming, and we may not be able to file and prosecute allnecessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail toidentify patentable aspects of our research and development output before it is too late to obtain patent protection. We maynot have the right to control the preparation, filing and prosecution of patent applications, or to maintain the rights to patentslicensed to third parties. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistentwith the best interests of our business.The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complexlegal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreigncountries may not protect our rights to the same extent as the laws of the United States, or vice versa. For example, Europeanpatent law restricts the patentability of methods of treatment of the human body more than U.S. law does. Publications ofdiscoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United Statesand other jurisdictions are typically not published until 18 months after filing or, in some cases, not at all. Therefore, wecannot know with certainty whether we were the first to make the inventions claimed in our patents or pending patentapplications, or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity,enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applicationsmay not result in patents being issued that protect our drug candidates, in whole or in part, or which effectively preventothers from commercializing competitive drug candidates.41 Table of ContentsChanges in either the patent laws or interpretation of the patent laws in the United States and other countries may diminishthe value of our patents or narrow the scope of our patent protection.Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patentapplications and the enforcement or defense of our issued patents. On September 16, 2011, the Leahy-Smith America InventsAct, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S.patent law. These include provisions that affect the way patent applications are prosecuted and may also affect patentlitigation. The U.S. Patent and Trademark Office recently developed new regulations and procedures to governadministration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-SmithAct, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what,if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and itsimplementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and theenforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financialcondition.Moreover, we may be subject to a third-party preissuance submission of prior art to the U.S. Patent and TrademarkOffice, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interferenceproceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission,proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize ourdrug candidates and compete directly with us, without payment to us, or result in our inability to manufacture orcommercialize drugs without infringing third-party patent rights. In addition, if the breadth or strength of protectionprovided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us tolicense, develop or commercialize current or future drug candidates.Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningfulprotection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Ourcompetitors may be able to circumvent our patents by developing similar or alternative drug candidates in a non-infringingmanner.In addition, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and ourpatents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in lossof exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or inpart, which could limit our ability to stop others from using or commercializing similar or identical drug candidates, or limitthe duration of the patent protection of our drug candidates. Given the amount of time required for the development, testingand regulatory review of new drug candidates, patents protecting such candidates might expire before or shortly after suchcandidates are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude othersfrom commercializing drugs similar or identical to ours.We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could beexpensive, time consuming and unsuccessful.Competitors may infringe our issued patents or other intellectual property. To counter infringement or unauthorizeduse, we may be required to file infringement claims, which can be expensive and time consuming. Any claims we assertagainst perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe theirpatents. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable,in whole or in part, construe the patent’s claims narrowly or refuse to stop the other party from using the technology at issueon the grounds that our patents do not cover the technology. An adverse result in any litigation proceeding could put one ormore of our patents at risk of being invalidated or interpreted narrowly.We may need to license intellectual property from third parties, and such licenses may not be available or may not beavailable on commercially reasonable terms.A third party may hold intellectual property, including patent, rights that are important or necessary to thedevelopment of our drug candidates. It may be necessary for us to use patented or proprietary technology of third parties tocommercialize our drug candidates, in which case we would be required to obtain a license from these third parties oncommercially reasonable terms, or our business could be harmed, possibly materially.42 Table of ContentsThird parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, theoutcome of which would be uncertain and could have a material adverse effect on the success of our business.Our commercial success depends upon our ability, and the ability of our collaborators, to develop, manufacture, marketand sell our drug candidates without infringing the proprietary rights of third parties. There is considerable intellectualproperty litigation in the biotechnology and pharmaceutical industries. We may become party to, or threatened with, futureadversarial proceedings or litigation regarding intellectual property rights with respect to our drug candidates, includinginterference or derivation proceedings before the U.S. Patent and Trademark Office. Third parties may assert infringementclaims against us based on existing patents or patents that may be granted in the future.If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from suchthird party to continue developing and marketing our drug candidates. However, we may not be able to obtain any requiredlicense on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive,thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order,to cease commercializing the infringing drug. In addition, we could be found liable for monetary damages, including trebledamages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent usfrom commercializing our drug candidates or force us to cease some of our business operations. Claims that we havemisappropriated the confidential information or trade secrets of third parties could have a similar negative impact on ourbusiness.We may be subject to claims by third parties asserting that we or our employees have misappropriated theirintellectual property, or claiming ownership of what we regard as our own intellectual property.Many of our employees were previously employed at universities or other biotechnology or pharmaceuticalcompanies. Although we try to ensure that our employees do not use the proprietary information or know-how of others intheir work for us, we may be subject to claims that these employees or we have used or disclosed intellectual property,including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may benecessary to defend against these claims.In addition, while it is our policy to require our employees and contractors who may be involved in the development ofintellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executingsuch an agreement with each party who in fact develops intellectual property that we regard as our own. Our and theirassignment agreements may not be self-executing or may be breached, and we may be forced to bring claims against thirdparties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuableintellectual property rights or personnel. Even if we are successful in prosecuting or defending against such claims, litigationcould result in substantial costs and be a distraction to management.Intellectual property litigation could cause us to spend substantial resources and distract our personnel from theirnormal responsibilities.Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause usto incur significant expenses, and could distract our technical and management personnel from their normal responsibilities.In addition, there could be public announcements of the results of hearings, motions or other interim proceedings ordevelopments, and if securities analysts or investors perceive these results to be negative it could have a substantial adverseeffect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses andreduce the resources available for development activities or any future sales, marketing or distribution activities. We may nothave sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitorsmay be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greaterfinancial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedingscould compromise our ability to compete in the marketplace.43 Table of ContentsIf we are unable to protect the confidentiality of our trade secrets, our business and competitive position would beharmed.In addition to seeking patents for our drug candidates, we also rely on trade secrets, including unpatented know-how,technology and other proprietary information, to maintain our competitive position. For example, our platform is based ontrade secrets that consist largely of expertise in carbohydrate chemistry and knowledge of carbohydrate biology. We do notbelieve that we can obtain patent protection for our platform. Thus, our competitors may use our methods, or acquire similarexpertise, in order to develop glycomimetic drug candidates and progress these drug candidates through clinicaldevelopment and commercialization, which could impair our ability to successfully commercialize our drug candidates.We seek to protect our trade secrets, in part, by entering into non-disclosure and confidentiality agreements with partieswho have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contractmanufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patentassignment agreements with our employees and consultants. Despite these efforts, any of these parties may breach theagreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequateremedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult,expensive and time consuming, and the outcome is unpredictable. In addition, some courts inside and outside the UnitedStates are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained orindependently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it,from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to orindependently developed by a competitor, our competitive position would be harmed.Risks Related to Regulatory Approval of Our Drug Candidates and Other Legal Compliance MattersIf we or our collaborators are not able to obtain, or if there are delays in obtaining, required regulatory approvals,we or they will not be able to commercialize our drug candidates and our ability to generate revenue will be materiallyimpaired.Our drug candidates and the activities associated with their development and commercialization, including theirdesign, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale anddistribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and bythe European Medicines Agency, or EMA, and similar regulatory authorities outside the United States. Failure to obtainmarketing approval for a drug candidate will prevent us or our collaborators from commercializing the drug candidate. Wehave not received approval to market any of our drug candidates from regulatory authorities in any jurisdiction. We haveonly limited experience in filing and supporting the applications necessary to gain marketing approvals and expect to relyon third-party CROs to assist us in this process for drug candidates other than rivipansel. Securing marketing approvalrequires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities foreach therapeutic indication to establish the drug candidate’s safety and efficacy. Securing marketing approval also requiresthe submission of information about the product manufacturing process to, and inspection of manufacturing facilities by,applicable regulatory authorities. Our drug candidates may not be effective, may be only moderately effective or may proveto have undesirable or unintended side effects, toxicities or other characteristics that may preclude our ability to obtainmarketing approval or prevent or limit commercial use. If any of our drug candidates receives marketing approval, theaccompanying label may limit the approved use of our drug, which could limit sales of the drug.The process of obtaining marketing approvals, both in the United States and abroad, is expensive and may take manyyears if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety offactors, including the type, complexity and novelty of the drug candidates involved. Changes in marketing approval policiesduring the development period, changes in or the enactment of additional statutes or regulations or changes in regulatoryreview for each submitted drug application may cause delays in the approval or rejection of an application. Regulatoryauthorities have substantial discretion in the approval process and may refuse to accept any application, or may decide thatour data is insufficient for approval and require additional preclinical, clinical or other studies. In addition, varyinginterpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of adrug candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approvalcommitments that render the approved drug not commercially viable.44 Table of ContentsFor marketing exclusivity in the treatment of an ongoing VOC episode in sickle cell disease, we expect to relyprimarily on the orphan drug designation that the FDA has granted us for rivipansel, which includes the treatment of thecomplications of sickle cell disease. We have similarly received orphan drug designation for GMI-1271 from the FDA as wellas from the EMA in the European Union as a potential treatment for AML. However, in order to obtain marketing exclusivityin a particular jurisdiction, we must receive the first marketing approval of the drug for its intended indication. In addition,the orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approvalprocess.If we experience delays in obtaining approval or if we fail to obtain approval of our drug candidates, the commercialprospects for our drug candidates may be harmed and our ability to generate revenue will be materially impaired.Even though we have obtained orphan drug designation for our most advanced drug candidate, rivipansel, and forGMI-1271, we may not be able to obtain orphan drug marketing exclusivity for these drug candidates or any of our otherdrug candidates.Regulatory authorities in some jurisdictions, including the United States and the European Union, or EU, maydesignate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designatea drug as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a patientpopulation of fewer than 200,000 individuals annually in the United States. We have obtained orphan drug designation fromthe FDA and the EMA for rivipansel for the treatment of VOC. We have also obtained orphan drug designation from the FDAfor GMI-1271 for the treatment of AML. We may seek orphan drug designation for our other drug candidates or for GMI-1271 for additional indications, such as MM. Generally, if a drug with an orphan drug designation subsequently receives thefirst marketing approval for the indication for which it has such designation, the drug is entitled to a period of marketingexclusivity, which precludes the FDA or the EMA from approving another marketing application for the same drug for thesame indication for that time period. The applicable period is seven years in the United States and 10 years in the EU. The EUexclusivity period can be reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drugis sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA orEMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficientquantity of the drug to meet the needs of patients with the rare disease or condition.Even if we obtain orphan drug exclusivity for a drug candidate, that exclusivity may not effectively protect thecandidate from competition because different drugs can be approved for the same condition. Even after an orphan drug isapproved, the FDA can subsequently approve another drug with the same active moiety for the same condition if the FDAconcludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contributionto patient care.The FDA fast track designation for rivipansel and GMI-1271 and additional breakthrough designation for GMI-1271 may not actually lead to a faster development or regulatory review or approval process.If a drug is intended for the treatment of a serious or life-threatening disease or condition and the drug demonstrates thepotential to address unmet medical needs for this disease or condition, the drug sponsor may apply for FDA fast trackdesignation. If fast track designation is obtained, the FDA may initiate review of sections of a new drug application, or NDA,before the application is complete. This “rolling review” is available if the applicant provides, and the FDA approves, aschedule for submission of the individual sections of the application.Although we have obtained a fast track designation from the FDA for rivipansel to treat VOC and for GMI-1271 to treatAML and breakthrough designation for GMI-1271 to treat AML, we may not experience a faster development process, reviewor approval compared to conventional FDA procedures. Our fast track designation may be withdrawn by the FDA if itbelieves that the designation is no longer supported by data from our clinical development programs. Our fast trackdesignation does not guarantee that we will qualify for or be able to take advantage of the expedited review procedures orthat we will ultimately obtain regulatory approval of rivipansel or GMI-1271.45 Table of ContentsFailure to obtain marketing approval in international jurisdictions would prevent our drug candidates from beingmarketed abroad.In order to market and sell our drugs in the EU and any other jurisdictions, we or our collaborators must obtain separatemarketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies amongcountries and can involve additional testing. The time required to obtain approval may differ substantially from that requiredto obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risksassociated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the drugbe approved for reimbursement before it can be approved for sale in that country. We or our collaborators may not obtainapprovals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does notensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authorityoutside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA.However, failure to obtain approval in one jurisdiction may impact our ability to obtain approval elsewhere. We or ourcollaborators may not be able to file for marketing approvals and may not receive necessary approvals to commercialize ourdrugs in any market.A variety of risks associated with marketing our drug candidates internationally could hurt our business.We or our collaborators may seek regulatory approval for rivipansel and our other drug candidates outside of theUnited States and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countriesif we obtain the necessary approvals, including:·differing regulatory requirements in foreign countries;·the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higherlocal prices, opts to import goods from a foreign market with low or lower prices rather than buying them locally;·unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;·economic weakness, including inflation or political instability in particular foreign economies and markets;·compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;·foreign taxes, including withholding of payroll taxes;·foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and otherobligations related to doing business in another country;·difficulties staffing and managing foreign operations;·workforce uncertainty in countries where labor unrest is more common than in the United States;·potential liability under the Foreign Corrupt Practices Act or comparable foreign regulations;·challenges enforcing our contractual and intellectual property rights, especially in foreign countries that do notrespect and protect intellectual property rights to the same extent as the United States;·production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;and·business interruptions resulting from geo-political actions, including war and terrorism.These and other risks associated with our potential international operations may compromise our ability to achieve ormaintain profitability.46 Table of ContentsAny drug candidate for which we obtain marketing approval could be subject to post-marketing restrictions or recallor withdrawal from the market, and we may therefore be subject to penalties if we fail to comply with regulatoryrequirements or if we experience unanticipated problems with our drug candidates, when and if any of them are approved.Any drug candidate for which we obtain marketing approval, along with manufacturing processes, post-approvalclinical data, labeling, advertising and promotional activities for such drug candidate, will be subject to continualrequirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safetyand other post-marketing information and reports, registration and listing requirements, cGMP requirements relating tomanufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirementsregarding the distribution of samples to physicians and recordkeeping. Even if marketing approval of a drug candidate isgranted, the approval may be subject to limitations on the indicated uses for which the drug may be marketed or to theconditions of approval, including the requirement to implement a risk evaluation and mitigation strategy. If any of our drugcandidates receives marketing approval, the accompanying label may limit the approved use of our drug, which could limitits sales.The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitorthe safety or efficacy of the drug. The FDA closely regulates the post-approval marketing and promotion of drugs to ensuredrugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling. TheFDA imposes stringent restrictions on manufacturers’ communications regarding off-label use, and if we do not market ourdrugs for their approved indications, we may be subject to enforcement action for off-label marketing. Violations of theFederal Food, Drug, and Cosmetic Act relating to the promotion of prescription drugs may lead to investigations allegingviolations of federal and state healthcare fraud and abuse laws, as well as state consumer protection laws.In addition, later discovery of previously unknown adverse events or other problems with our drugs, manufacturers ormanufacturing processes, or failure to comply with regulatory requirements, may have negative consequences, including:·restrictions on such drugs, manufacturers or manufacturing processes;·restrictions on the labeling or marketing of a drug;·restrictions on product distribution or use;·requirements to conduct post-marketing studies or clinical trials;·warning letters;·recall or withdrawal of the drugs from the market;·refusal to approve pending applications or supplements to approved applications that we submit;·clinical holds;·fines, restitution or disgorgement of revenue or profit;·suspension or withdrawal of marketing approvals;·refusal to permit the import or export of our drugs;·product seizure; or·injunctions or the imposition of civil or criminal penalties.Non-compliance with EU requirements regarding safety monitoring or pharmacovigilance, and with requirementsrelated to the development of drugs for the pediatric population, can also result in significant financial penalties. Similarly,failure to comply with the EU’s requirements regarding the protection of personal information can also lead to significantpenalties and sanctions.47 Table of ContentsOur current and future business and relationships with customers and third-party payors in the United States andelsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency,health information privacy and security and other healthcare laws and regulations, which could expose us to criminalsanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits andfuture earnings.Healthcare providers and third-party payors in the United States and elsewhere will play a primary role in therecommendation and prescription of any drug candidates for which we obtain marketing approval. Our current and futurearrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and otherhealthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal False ClaimsAct, which may constrain the business or financial arrangements and relationships through which we conduct clinicalresearch, sell, market and distribute any drugs for which we obtain marketing approval. In addition, we may be subject totransparency laws and patient data privacy and security regulation by the U.S. federal and state governments and bygovernments in foreign jurisdictions in which we conduct our business. The applicable federal, state and foreign healthcarelaws and regulations that may affect our ability to operate include:·the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfullysoliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce orreward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, anygood or service, for which payment may be made under federal healthcare programs, such as Medicare andMedicaid;·federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act,which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals orentities for knowingly presenting, or causing to be presented, to the federal government, including the Medicareand Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid,decrease or conceal an obligation to pay money to the federal government;·the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal andcivil liability for executing a scheme to defraud any healthcare benefit program or making false statements relatingto healthcare matters;·HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, orHITECH, and their respective implementing regulations, which impose obligations on covered healthcareproviders, health plans, and healthcare clearinghouses, as well as their business associates that create, receive,maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respectto safeguarding the privacy, security and transmission of individually identifiable health information;·the federal Open Payments program, pursuant to the Physician Payments Sunshine Act, which requiresmanufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare,Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centersfor Medicare & Medicaid Services, or CMS, information related to “payments or other transfers of value” made tophysicians, which is defined to include doctors, dentists, optometrists, podiatrists and chiropractors, and teachinghospitals and applicable manufacturers and applicable group purchasing organizations to report annually to CMSownership and investment interests held by the physicians and their immediate family members, with disclosure ofsuch information to be made by CMS on a publicly available website; and·analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which mayapply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceuticalcompanies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevantcompliance guidance promulgated by the federal government or otherwise restrict payments that may be made tohealthcare providers; state and foreign laws that require drug manufacturers to report information related topayments and other transfers of value to physicians and other healthcare providers or marketing expenditures; andstate and foreign laws governing the privacy and security of health information in certain circumstances, many ofwhich differ from each other in significant ways and often are not preempted by HIPAA, thus complicatingcompliance efforts.48 Table of ContentsEfforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws andregulations may involve substantial costs. It is possible that governmental authorities will conclude that our businesspractices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse orother healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any othergovernmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties,including, without limitation, damages, fines, individual imprisonment, additional reporting requirements and oversight ifwe become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance withthese laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion fromparticipation in government healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of ouroperations, which could have a material adverse effect on our business. If any of the physicians or other healthcare providersor entities with whom we expect to do business, including our collaborators, is found not to be in compliance with applicablelaws, it may be subject to criminal, civil or administrative sanctions, including exclusions from participation in governmenthealthcare programs, which could also materially affect our business.Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval ofand commercialize our drug candidates and affect the prices we may obtain.In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes andproposed changes regarding the healthcare system that could prevent or delay marketing approval of our drug candidates,restrict or regulate post-approval activities and affect our ability to profitably sell any drug candidates for which we obtainmarketing approval.Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changesin healthcare systems with the stated goals of containing healthcare costs, improving quality and expanding access. In theUnited States, the pharmaceutical industry has been a particular focus of these efforts, which include major legislativeinitiatives to reduce the cost of care through changes in the healthcare system, including limits on the pricing, coverage, andreimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded health careprograms, and increased governmental control of drug. In March 2010, President Obama signed into law the PatientProtection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectivelyPPACA, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcarespending, improve quality of care, enhance remedies against fraud and abuse, add new transparency requirements for thehealthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional healthpolicy reforms.Among the provisions of PPACA of importance to our business and potential drug candidates are:·an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs andbiologic agents, apportioned among these entities according to their market share in certain government healthcareprograms;·an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to23.1% and 13.0% of the average manufacturer price for branded and generic drugs, respectively;·expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, newgovernment investigative powers and enhanced penalties for non-compliance;·a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gapperiod, as a condition for a manufacturer’s outpatient drugs to be covered under Medicare Part D;·extension of a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolledin Medicaid managed care organizations;·expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaidcoverage to additional individuals and by adding new mandatory eligibility categories for certain individuals withincome at or below 133% of the federal poverty level beginning in 2014, thereby potentially increasing amanufacturer’s Medicaid rebate liability;49 Table of Contents·expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;·the new requirements under the federal Open Payments program and its implementing regulations;·a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and·a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparativeclinical effectiveness research, along with funding for such research. There have been judicial and Congressional challenges to certain aspects of PPACA, and we expect there will beadditional challenges and amendments in the future. In January, Congress voted to adopt a budget resolution for fiscal year2017, or the Budget Resolution, that authorizes the implementation of legislation that would repeal portions of PPACA. TheBudget Resolution is not a law, however, it is widely viewed as the first step toward the passage of repeal legislation. Further,on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities andresponsibilities under PPACA to waive, defer, grant exemptions from, or delay the implementation of any provision ofPPACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, ormanufacturers of pharmaceuticals or medical devices. Congress also could consider subsequent legislation to replaceelements of PPACA that are repealed. We cannot predict how PPACA, its possible repeal, or any legislation that may beproposed to replace PPACA will impact our business.In addition, other legislative changes have been proposed and adopted since PPACA was enacted. These changesinclude aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which began in 2013, pursuantto the Budget Control Act of 2011. On March 1, 2013, the President signed an executive order implementing the 2%Medicare payment reductions, and on April 1, 2013, these reductions went into effect. Pursuant to the Bipartisan Budget Actof 2015, these reductions will stay in effect through 2025, unless additional Congressional action is taken. In January 2013,President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicarepayments to several providers and increased the statute of limitations period for the government to recover overpayments toproviders from three to five years. These new laws may result in additional reductions in Medicare and other healthcarefunding, which could have a material adverse effect on customers for our drugs, if approved, and, accordingly, our financialoperations.Although we are unsure of the full impact that PPACA will have on our business, we expect that PPACA, as well asother healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and inadditional downward pressure on the price that we receive for any approved drug. Any reduction in reimbursement fromMedicare or other government-funded programs may result in a similar reduction in payments from private payors. There hasbeen increasing legislative and enforcement interest in the United States with respect to specialty drug pricingpractices. Specifically, there have been several recent U.S. Congressional inquiries and proposed bills designed to, amongother things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patientprograms, and reform government program reimbursement methodologies for drugs. The implementation of cost containmentmeasures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability orcommercialize our drugs.Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales andpromotional activities for drugs. We cannot be sure whether additional legislative changes will be enacted, or whether theFDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvalsof our drug candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval processmay significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.Governments outside the United States tend to impose strict price controls, which may adversely affect our revenue, ifany.In some countries, particularly in the EU, the pricing of prescription pharmaceuticals is subject to governmentalcontrol. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt50 Table of Contentsof marketing approval for a drug. To obtain coverage and reimbursement or pricing approval in some countries, we may berequired to conduct a clinical trial that compares the cost-effectiveness of our drug candidate to other available therapies. Ifreimbursement of our drugs is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, ourbusiness could be harmed, possibly materially.If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines orpenalties or incur costs that could harm our business.We are subject to numerous environmental, health and safety laws and regulations, including those governinglaboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Ouroperations involve the use of hazardous and flammable materials, including chemicals and biological materials. Ouroperations also produce hazardous waste products. We generally contract with third parties for the disposal of these materialsand wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination orinjury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liabilitycould exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties forfailure to comply with such laws and regulations.Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due toinjuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverageagainst potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may beasserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.In addition, we may incur substantial costs in order to comply with current or future environmental, health and safetylaws and regulations. These current or future laws and regulations may impair our research, development or productionefforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.Risks Related to Employee Matters and Managing Our GrowthOur future success depends on our ability to retain key executives and to attract, retain and motivate qualifiedpersonnel.We are highly dependent on the management, research and development, clinical, financial and business developmentexpertise of Rachel King, our President and Chief Executive Officer; John Magnani, our Senior Vice President of Researchand Chief Scientific Officer; Helen Thackray, our Senior Vice President of Clinical Development and Chief Medical Officer;and Brian Hahn, our Chief Financial Officer, as well as the other members of our scientific and clinical teams. In particular,we are dependent upon Dr. Magnani for key expertise in carbohydrate chemistry and knowledge of carbohydrate biologywith respect to our glycomimetics platform, and the loss of his services would materially impair our future drug discoveryefforts. Although we have entered into employment agreements with our executive officers, each of them may currentlyterminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives oremployees other than Ms. King.Recruiting and retaining qualified scientific and clinical personnel and, if we progress the development of our drugpipeline other than rivipansel toward scaling up for commercialization, sales and marketing personnel, will also be critical toour success. The loss of the services of our executive officers or other key employees could impede the achievement of ourresearch, development and commercialization objectives and seriously harm our ability to successfully implement ourbusiness strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extendedperiod of time because of the limited number of individuals in our industry with the breadth of skills and experience requiredto successfully develop, gain regulatory approval for and commercialize our drug candidates. Competition to hire qualifiedpersonnel in our industry is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptableterms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We alsoexperience competition for the hiring of scientific and clinical personnel from universities and research institutions. Inaddition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating ourresearch and development and commercialization strategy. Our consultants and advisors may be employed by employersother than us and may have commitments under consulting51 Table of Contentsor advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract andretain high quality personnel, our ability to pursue our growth strategy will be limited.We expect to expand our development and regulatory capabilities and potentially implement sales, marketing anddistribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt ouroperations.As our development progresses, we expect to experience significant growth in the number of our employees and thescope of our operations, particularly in the areas of research, drug development, regulatory affairs and, if any of our drugcandidates receives marketing approval, sales, marketing and distribution. To manage our anticipated future growth, we mustcontinue to implement and improve our managerial, operational and financial systems, expand our facilities and continue torecruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of ourmanagement team in managing a company with such anticipated growth, we may not be able to effectively manage theexpansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead tosignificant costs and may divert our management and business development resources. Any inability to manage growthcould delay the execution of our business plans or disrupt our operations.Our employees and employees of our collaborators may engage in misconduct or other improper activities, includingnon-compliance with regulatory standards and requirements.We and our collaborators are exposed to the risk of employee fraud or other misconduct. Misconduct by employeescould include intentional failures to comply with FDA regulations, to provide accurate information to the FDA, to complywith manufacturing standards we have established, to comply with federal and state healthcare fraud and abuse laws andregulations, to report financial information or data accurately or to disclose unauthorized activities to us. In particular, sales,marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended toprevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a widerange of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other businessarrangements. Employee misconduct could also involve the improper use of individually identifiable information, including,without limitation, information obtained in the course of clinical trials, which could result in regulatory sanctions andserious harm to our reputation. We have adopted a code of business conduct and ethics, but it is not always possible toidentify and deter employee misconduct, and the precautions we take to detect and prevent improper activities may not beeffective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or otheractions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions areinstituted against us, and we are not successful in defending ourselves or asserting our rights, or any such actions areinstituted against any of our collaborators, those actions could have a significant impact on our business, including theimposition of significant fines or other sanctions and diminished royalties.Risks Related to Ownership of Our Common StockAn active trading market for our common stock may not continue to develop or be sustained.Prior to our IPO in January 2014, there was no public market for our common stock. Although our common stock islisted on The Nasdaq Global Market, we cannot assure you that an active trading market for our shares will continue todevelop or be sustained. If an active market for our common stock does not continue to develop or is not sustained, it may bedifficult for investors in our common stock to sell shares without depressing the market price for the shares or to sell theshares at all.The trading price of the shares of our common stock has been and is likely to continue to be volatile.Since our IPO, our stock price has been volatile. The stock market in general and the market for biopharmaceuticalcompanies in particular have experienced extreme volatility that has often been unrelated to the operating performance ofparticular companies. As a result of this volatility, investors may not be able to sell their common stock at or above the pricepaid for the shares. The market price for our common stock may be influenced by many factors, including:·announcements relating to development, regulatory approvals or commercialization of our drug candidates;52 Table of Contents·actual or anticipated variations in our operating results;·changes in financial estimates by us or by any securities analysts who might cover our stock;·conditions or trends in our industry;·changes in laws or other regulatory actions affecting us or our industry;·stock market price and volume fluctuations of comparable companies and, in particular, those that operate in thebiopharmaceutical industry;·announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;·announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;·capital commitments;·investors’ general perception of our company and our business;·disputes concerning our intellectual property or other proprietary rights;·recruitment or departure of key personnel; and·sales of our common stock, including sales by our directors and officers or specific stockholders.In addition, in the past, stockholders have initiated class action lawsuits against pharmaceutical and biotechnologycompanies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted againstus, could cause us to incur substantial costs and divert management’s attention and resources from our business.If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about us,our business or our market, our stock price and trading volume could decline.The trading market for our common stock is influenced by the research and reports that equity research analysts publishabout us and our business. As a newly public company, we have only limited research coverage by equity research analysts.Equity research analysts may elect not to initiate or continue to provide research coverage of our common stock, and suchlack of research coverage may adversely affect the market price of our common stock. Even if we have equity research analystcoverage, we will not have any control over the analysts or the content and opinions included in their reports. The price ofour stock could decline if one or more equity research analysts downgrade our stock or issue other unfavorable commentaryor research. If one or more equity research analysts ceases coverage of our company or fails to publish reports on us regularly,demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.The issuance of additional stock in connection with financings, acquisitions, investments, our stock incentive plan,our employee stock purchase plan or otherwise will dilute all other stockholders.Our certificate of incorporation authorizes us to issue up to 100,000,000 shares of common stock and up to 5,000,000shares of preferred stock with such rights and preferences as may be determined by our board of directors. Subject tocompliance with applicable rules and regulations, we may issue our shares of common stock or securities convertible into ourcommon stock from time to time in connection with a financing, acquisition, investment, our stock incentive plan, ouremployee stock purchase plan or otherwise. Any such issuance could result in substantial dilution to our existingstockholders and cause the trading price of our common stock to decline.If a substantial number of our total outstanding shares are sold into the market, or if the market perceives that suchsales may occur, it could cause the market price of our common stock to drop significantly, even if our business is doingwell.Sales of a substantial number of shares of our common stock in the public market could occur at any time. If ourstockholders sell, or if the market perceives that our stockholders intend to sell, substantial amounts of our common stock inthe public market, the market price of our common stock could decline significantly. All of our outstanding53 Table of Contentsshares of common stock are available for sale in the public market, subject only to the restrictions of Rule 144 under theSecurities Act in the case of our affiliates.In addition, we have filed registration statements on Form S-8 registering the issuance of approximately 4.6 millionshares of common stock subject to options or other equity awards issued or reserved for future issuance under our equityincentive plans. Shares registered under these registration statements are available for sale in the public market subject tovesting arrangements and exercise of options, as well as Rule 144 in the case of our affiliates.Additionally, some of the holders of our common stock who acquired their shares of our stock prior to the IPO, as wellas some of the holders of outstanding warrants to purchase our common stock, or their transferees, have rights, subject tosome conditions, to require us to file one or more registration statements covering their shares or to include their shares inregistration statements that we may file for ourselves or other stockholders. If we were to register the resale of these shares,they could be freely sold in the public market. If these additional shares are sold, or if it is perceived that they will be sold, inthe public market, the trading price of our common stock could decline.Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by ourstockholders to change our management and hinder efforts to acquire a controlling interest in us, and the market price ofour common stock may be lower as a result.There are provisions in our certificate of incorporation and bylaws that may make it difficult for a third party to acquire,or attempt to acquire, control of our company, even if a change in control was considered favorable by some or all of ourstockholders. For example, our board of directors has the authority to issue up to 5,000,000 shares of preferred stock. Theboard of directors can fix the price, rights, preferences, privileges and restrictions of the preferred stock without any furthervote or action by our stockholders. The issuance of shares of preferred stock may delay or prevent a change in controltransaction. As a result, the market price of our common stock and the voting and other rights of our stockholders may beadversely affected. An issuance of shares of preferred stock may result in the loss of voting control to other stockholders.Our charter documents also contain other provisions that could have an anti-takeover effect, including:·only one of our three classes of directors is elected each year;·stockholders are not entitled to remove directors other than by a 66 2/3% vote and only for cause;·stockholders are not permitted to take actions by written consent;·stockholders cannot call a special meeting of stockholders; and·stockholders must give advance notice to nominate directors or submit proposals for consideration at stockholdermeetings.In addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law,which regulates corporate acquisitions by prohibiting Delaware corporations from engaging in specified businesscombinations with particular stockholders of those companies. These provisions could discourage potential acquisitionproposals and could delay or prevent a change in control transaction. They could also have the effect of discouraging othersfrom making tender offers for our common stock, including transactions that may be in your best interests. These provisionsmay also prevent changes in our management or limit the price that investors are willing to pay for our stock.Our certificate of incorporation also provides that the Court of Chancery of the State of Delaware will be the exclusiveforum for substantially all disputes between us and our stockholders.Concentration of ownership of our common stock among our existing executive officers, directors and principalstockholders may prevent new investors from influencing significant corporate decisions.Our executive officers, directors and current beneficial owners of 5% or more of our common stock and their respectiveaffiliates beneficially own a majority of our common stock. Further, funds controlled by one investor, New EnterpriseAssociates, or NEA, beneficially own approximately 26% of our common stock. As a result, NEA is able to significantlyinfluence, and together with these other persons would be able to control, all matters requiring stockholder54 Table of Contentsapproval, including the election and removal of directors, any merger, consolidation, sale of all or substantially all of ourassets or other significant corporate transactions. The interests of this group of stockholders may not coincide with ourinterests or the interests of other stockholders.We are an “emerging growth company,” and as a result of the reduced disclosure and governance requirementsapplicable to emerging growth companies, our common stock may be less attractive to investors.We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act,and we intend to take advantage of some of the exemptions from reporting requirements that are applicable to other publiccompanies that are not emerging growth companies, including:·being permitted to provide only two years of audited financial statements, in addition to any required unauditedinterim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” disclosure;·not being required to comply with the auditor attestation requirements in the assessment of our internal controlover financial reporting;·not being required to comply with any requirement that may be adopted by the Public Company AccountingOversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providingadditional information about the audit and the financial statements;·reduced disclosure obligations regarding executive compensation; and·not being required to hold a non-binding advisory vote on executive compensation or obtain stockholder approvalof any golden parachute payments not previously approved.We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. Ifsome investors find our common stock less attractive as a result, there may be a less active trading market for our commonstock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longeran emerging growth company. We will remain an emerging growth company until the earlier of (1) December 31, 2019, (2)the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (3) the last day of thefiscal year in which we are deemed to be a large accelerated filer, which means the market value of our common stock that isheld by non-affiliates exceeds $700 million as of the prior June 30th and (4) any date on which we have issued more than$1.0 billion in non-convertible debt during the prior three-year period.Under Section 107(b) of the JOBS Act, emerging growth companies can delay adopting new or revised accountingstandards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselvesof this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revisedaccounting standards as other public companies that are not emerging growth companies.If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on atimely basis could be impaired.We are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002,the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations of The NasdaqGlobal Market. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls andprocedures and internal control over financial reporting and perform system and process evaluation and testing of ourinternal control over financial reporting to allow management to report on the effectiveness of our internal control overfinancial reporting. This requires that we incur substantial additional professional fees and internal costs to expand ouraccounting and finance functions and that we expend significant management efforts.We may in the future discover areas of our internal financial and accounting controls and procedures that needimprovement. Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system,no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’sobjectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provideabsolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud willbe detected.55 Table of ContentsIf we are unable to maintain proper and effective internal controls in the future, we may not be able to produce timelyand accurate financial statements, and we may conclude that our internal controls over financial reporting are not effective. Ifthat were to happen, the market price of our stock could decline and we could be subject to sanctions or investigations byNasdaq, the SEC or other regulatory authorities.We do not anticipate paying any cash dividends on our common stock in the foreseeable future and our stock maynot appreciate in value.We have not declared or paid cash dividends on our common stock to date. We currently intend to retain our futureearnings, if any, to fund the development and growth of our business. In addition, the terms of any future debt agreementsmay preclude us from paying dividends. There is no guarantee that shares of our common stock will appreciate in value orthat the price at which our stockholders have purchased their shares will be able to be maintained.We will incur increased costs and demands upon management as a result of being a public company.As a newly public company listed in the United States, we have begun, and will continue, particularly after we cease tobe an “emerging growth company,” to incur significant additional legal, accounting and other costs. These additional costscould negatively affect our financial results. In addition, changing laws, regulations and standards relating to corporategovernance and public disclosure, including regulations implemented by the SEC and Nasdaq, may increase legal andfinancial compliance costs and make some activities more time consuming. These laws, regulations and standards are subjectto varying interpretations and, as a result, their application in practice may evolve over time as new guidance is provided byregulatory and governing bodies.We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may resultin increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If we do not comply with new laws, regulations and standards, regulatoryauthorities may initiate legal proceedings against us and our business may be harmed.Failure to comply with these rules might also make it more difficult for us to obtain some types of insurance, includingdirector and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or incursubstantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficultfor us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or asmembers of senior management. ITEM 1B.UNRESOLVED STAFF COMMENTS None. ITEM 2.PROPERTIES Our principal offices occupy approximately 42,000 square feet of leased office space in Rockville, Maryland, pursuantto a lease agreement that expires in October 2023. We believe that our properties are generally in good condition, wellmaintained, suitable and adequate to carry on our business. We believe our capital resources are sufficient to lease anyadditional facilities required to meet our expected growth needs. ITEM 3.LEGAL PROCEEDINGS From time to time, we are subject to litigation and claims arising in the ordinary course of business. We are notcurrently a party to any material legal proceedings and we are not aware of any pending or threatened legal proceedingagainst us that we believe could have a material adverse effect on our business, operating results, cash flows or financialcondition. ITEM 4.MINE SAFETY DISCLOSURES Not applicable.56 Table of Contents PART II ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS ANDISSUER PURCHASES OF EQUITY SECURITIESMarket Information for Common StockOur common stock commenced trading on The Nasdaq Global Market under the symbol “GLYC” on January 10, 2014.Prior to our IPO, there was no public market for our common stock. The following table sets forth, for the periods indicated,the high and low reported sales price of our common stock as reported on the Nasdaq Global Market: Year Ended December 31, 2017 High Low First quarter $6.76 $5.34 Second quarter 16.94 3.82 Third quarter 15.41 10.06 Fourth quarter 18.25 10.25 Year Ended December 31, 2016 High Low First quarter $6.55 $3.70 Second quarter 9.25 5.82 Third quarter 8.89 6.58 Fourth quarter 7.42 5.50 Dividend PolicyWe have never declared or paid any dividends on our common stock. We anticipate that we will retain all of our futureearnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in theforeseeable future.StockholdersAs of February 28, 2018, we had 34,359,799 shares of common stock outstanding held by approximately 32 holders ofrecord. The actual number of stockholders is greater than this number of record holders and includes stockholders who arebeneficial owners but whose shares are held in street name by brokers and other nominees. This number of holders of recordalso does not include stockholders whose shares may be held in trust by other entities. Performance GraphThe following graph compares the performance of our common stock since January 10, 2014, the date of our IPO, withthe performance of the Nasdaq Composite Index (U.S.) and the Nasdaq Biotechnology Index. The comparison assumes a$100 investment on January 10, 2014 in our common stock, the stocks comprising the Nasdaq Composite Index, and thestocks comprising the Nasdaq Biotechnology Index, and assumes reinvestment of the full amount of all dividends, if any.Historical stockholder return is not necessarily indicative of the performance to be expected for any future periods.57 Table of ContentsComparison of Cumulative Total ReturnAmong GlycoMimetics, Inc., the Nasdaq Composite Index and the Nasdaq Biotechnology Index The performance graph shall not be deemed to be incorporated by reference by means of any general statementincorporating by reference this Form 10-K into any filing under the Securities Act of 1933, as amended or the Exchange Act,except to the extent that we specifically incorporate such information by reference, and shall not otherwise be deemed filedunder such acts.Recent Sales of Unregistered SecuritiesNone.Purchases of Equity Securities by the Issuer and Affiliated PartiesNone. 58 Table of Contents ITEM 6.SELECTED FINANCIAL DATA The following selected financial data as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 isderived from our audited financial statements, which have been audited by Ernst & Young LLP, independent registeredpublic accounting firm. The statement of operations data for the years ended December 31, 2014 and 2013, and the balancesheet data as of December 31, 2015, 2014 and 2013, have been derived from our audited financial statements which are notincluded herein. Our historical results are not necessarily indicative of the results to be expected in the future. The selectedfinancial data should be read together with Item 7. “Management’s Discussion and Analysis of Financial Condition andResults of Operations” and in conjunction with the financial statements, related notes, and other financial informationincluded elsewhere in this Annual Report. Year Ended December 31, (in thousands, except share and per share data) 2017 2016 2015 2014 2013Statement of Operations Data: Revenue $ — $18 $20,071 $15,027 $3,993Costs and expenses: Research and development expense 24,100 23,282 25,050 19,571 11,701General and administrative expense 9,832 8,650 7,805 6,596 2,899Total costs and expenses 33,932 31,932 32,855 26,167 14,600Loss from operations (33,932) (31,914) (12,784) (11,140) (10,607)Other income 651 104 15 18 1Net loss and comprehensive loss $(33,281) $(31,810) $(12,769) $(11,122) $(10,606)Net loss per share of common stock—basicand diluted $(1.13) $(1.50) $(0.67) $(0.60) $(8.87)Weighted average common sharesoutstanding, basic and diluted 29,395,756 21,256,312 19,010,587 18,452,252 1,196,162 As of December 31, (in thousands) 2017 2016 2015 2014 2013Balance Sheet Data: Cash and cash equivalents $123,925 $40,042 $46,803 $55,199 $2,311Total assets 128,583 42,388 48,462 57,264 5,283Total liabilities 8,882 7,087 7,991 6,461 2,376Total stockholders’ equity 119,701 35,301 40,472 50,803 2,90759 Table of Contents ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS You should read the following discussion and analysis of our financial condition and results of operations togetherwith our consolidated financial statements and the related notes and other financial information included elsewhere in thisAnnual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this AnnualReport, including information with respect to our plans and strategy for our business, includes forward-looking statementsthat involve risks and uncertainties. You should review Item 1A. “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in this Annual Report for a discussion of important factors that could cause actual results to differmaterially from the results described in or implied by the forward-looking statements contained in the following discussionand analysis. Overview We are a clinical-stage biotechnology company focused on the discovery and development of novel glycomimeticdrugs to address unmet medical needs resulting from diseases in which carbohydrate biology plays a key role. Glycomimeticsare molecules that mimic the structure of carbohydrates involved in important biological processes. Our proprietaryglycomimetics platform is based on our expertise in carbohydrate chemistry and our understanding of the role carbohydratesplay in key biological processes. Using this expertise and understanding, we are developing a pipeline of proprietaryglycomimetics designed to inhibit disease-related functions of carbohydrates, such as the roles they play in inflammation,cancer and infection. We believe this represents an innovative approach to drug discovery to treat a wide range of diseases. Most human proteins are modified by the addition of complex carbohydrates to the surface of the proteins. Theaddition of these carbohydrate structures affects the functions of these proteins and their interactions with other molecules.Our initial research and development efforts have focused on drug candidates targeting selectins, which are proteins thatserve as adhesion molecules and bind to carbohydrates that are involved in the inflammatory component and progression ofa wide range of diseases, including hematologic disorders, cancer and cardiovascular disease. Inhibiting specificcarbohydrates from binding to selectins has long been viewed as a potentially attractive approach for therapeuticintervention. The ability to successfully develop drug-like compounds that inhibit binding with selectins, known as selectinantagonists, has been limited by the complexities of carbohydrate chemistry. We believe our expertise in carbohydratechemistry enables us to design selectin antagonists and other glycomimetics that inhibit the disease-related functions ofcertain carbohydrates. We are focusing our initial efforts on drug candidates for rare diseases that we believe will qualify for orphan drugdesignation. Our first drug candidate, rivipansel, is a pan-selectin antagonist being developed for the treatment of vaso-occlusive crisis, or VOC, a debilitating and painful condition that occurs periodically throughout the life of a person withsickle cell disease. We have entered into an agreement with Pfizer Inc., or Pfizer, for the further development and potentialcommercialization of rivipansel worldwide. Rivipansel has received fast track designation from the U.S. Food and DrugAdministration, or FDA, as well as orphan drug designation from the FDA in the United States and from the EuropeanMedicines Agency, or EMA, in the European Union. We believe the clinical progress of rivipansel provides evidence of thesignificant potential of our lead program and our proprietary glycomimetics platform. Building on our experience with rivipansel, we are developing a pipeline of other glycomimetic drug candidates. Oursecond glycomimetic drug candidate, GMI-1271, is a specific E-selectin inhibitor, which we are developing to be used incombination with chemotherapy to treat patients with either acute myeloid leukemia, or AML, or multiple myeloma, or MM,both of which are life-threatening hematologic cancers, and potentially other hematologic cancers as well. We havecompleted an initial Phase 1 trial in healthy volunteers for GMI-1271 and in May 2017 we completed enrollment in a Phase1/2 clinical trial in defined populations of patients with AML. In December 2017, at the annual meeting of the AmericanSociety of Hematology, or ASH, we presented interim clinical data from this Phase 1/2 clinical trial that showed highremission rates and suggested a favorable safety, pharmacokinetic, or PK, and biomarker profile for GMI-1271. In March 2018, we announced our design for a randomized, double-blind, placebo-controlled Phase 3 clinical trial toevaluate GMI-1271 in individuals with relapsed/refractory AML, which design is aligned with guidance received from theFDA. Based on consultations with the FDA, the single pivotal trial is planned to enroll 380 adult patients at60 Table of Contentsapproximately 30 to 40 centers in the United States, Canada, Europe and Australia, with enrollment expected to begin in thethird quarter of 2018. The primary efficacy endpoint will be overall survival and, importantly, the FDA has indicated thatdata on overall survival will not need to be censored for transplant in the primary efficacy analysis, meaning that patientswho proceed to transplant will continue to be included as part of the survival analysis. The dosing regimen for our plannedPhase 3 trial will be the same as for our completed Phase 2 trial. All patients will be treated with standard chemotherapy ofeither MEC or FAI (fludarabine, cytarabine and idarubicin), with some of the patients randomized to receive GMI-1271 inaddition to chemotherapy. Patients receiving GMI-1271 will be dosed for one day prior to initiation of chemotherapy, twicea day through the chemotherapy regimen, and then for two days after the end of chemotherapy. The dose regimen will befixed, rather than weight-based, which we believe will simplify administration. We plan to offer multiple cycles ofconsolidation therapy in both arms of the trial for patients who achieve remission. We believe that multiple cycles oftreatment in patients who respond may drive an even deeper response in patients treated with GMI-1271. If this is the case, itcould lengthen the duration of remission with potential for additional benefit on survival. Key secondary endpoints of the Phase 3 trial will include the incidence of severe mucositis and remission rate, whichwill be assessed in a hierarchical fashion for potential inclusion in the product labeling, if GMI-1271 is approved formarketing by the FDA. We expect preliminary results from this trial to be available by the end of 2020. We have also initiated a Phase 1 multiple ascending dose-escalation trial of GMI-1271 in defined populations ofpatients with MM and plan to continue enrollment of the trial in 2018. We anticipate initial topline data in the first quarter of2019 in this trial. GMI-1271 received orphan drug designation from the FDA in May 2015 for the treatment of patients with AML. InJune 2016, GMI-1271 received fast track designation from the FDA for the treatment of adult patients with relapsed orrefractory AML and elderly patients aged 60 years or older with AML. In May 2017, GMI-1271 received breakthroughtherapy designation from the FDA for the treatment of adult patients with relapsed or refractory AML. In May 2017, theEuropean Commission, based on a favorable recommendation from the EMA Committee for Orphan Medicinal Products,granted orphan designation for GMI-1271 for the treatment of patients with AML. In February 2018, we entered into an agreement with the Haemato Oncology Foundation for Adults in the Netherlands,or HOVON, to initiate clinical trial startup activities to evaluate GMI-1271 in adults with newly diagnosed AML but whocannot tolerate intensive chemotherapy, as well as in patients with myelodysplastic syndrome, or MDS, with a high risk ofleukemia. The HOVON trial will be the first to evaluate GMI-1271, together with decitabine, in this underserved populationof AML and MDS patients, who are not considered by their physicians to be candidates for intensive chemotherapy; thesetwo populations represent a significant potential indication expansion opportunity for GMI-1271. HOVON intends to enrollapproximately 140 patients in the clinical trial, including a control arm. Patients will be evaluated after three cycles oftherapy, and key efficacy endpoints will include remission rate, disease-free survival and overall survival. The trial isexpected to start this year and will be conducted in five countries across Europe. We are also developing an additional drug candidate, GMI-1359, that simultaneously targets both E-selectin and achemokine receptor known as CXCR4. Since E-selectin and CXCR4 are both adhesion molecules that keep cancer cells inthe bone marrow, we believe that targeting both E-selectin and CXCR4 with a single compound could improve efficacy inthe treatment of cancers that affect the bone marrow such as AML and MM, as compared to targeting CXCR4 alone. GMI-1359 is currently being evaluated in a Phase 1 single-dose escalation trial of GMI-1359 in healthy volunteers. In this trial,volunteer participants receive a single injection of GMI-1359, after which they are evaluated for safety, tolerability, PK andpharmacodynamics. The randomized, double-blind, placebo-controlled, escalating dose study is being conducted at a singlesite in the United States. In addition to our programs described above, we are also advancing other preclinical-stage programs. These programsinclude small-molecule glycomimetic compounds that inhibit the protein galectin-3, which we believe may have potential tobe used for the treatment of fibrosis, cancer and cardiovascular disease.We commenced operations in 2003, and our operations to date have been limited to organizing and staffing ourcompany, business planning, raising capital, developing our glycomimetics platform, identifying potential drug61 Table of Contentscandidates, undertaking preclinical studies and conducting clinical trials of rivipansel, GMI-1271 and GMI-1359. To date,we have financed our operations primarily through private placements of our securities, upfront and milestone paymentsunder our collaboration with Pfizer and the net proceeds from our IPO in January 2014, at-the-market sales facilities withCowen and Company LLC, or Cowen, and our public offerings of common stock in June 2016 and May 2017. We have noapproved drugs currently available for sale, and substantially all of our revenue to date has been revenue from the upfrontand milestone payments from Pfizer, although we have received nominal amounts of revenue under research grants.Prior to our IPO, we raised an aggregate of $86.6 million to fund our operations, of which $22.5 million was an upfrontpayment under our collaboration with Pfizer and $64.1 million was from the sale of our convertible promissory notes andconvertible preferred stock. The IPO provided us with net proceeds of $57.2 million, and we received a non-refundablemilestone payment from Pfizer in May 2014 of $15.0 million. In August 2015, we received another non-refundable milestonepayment from Pfizer of $20.0 million following the dosing of the first patient in the Phase 3 clinical trial of rivipansel. Wereceived an additional $19.7 million in net proceeds from our public offering in June 2016 and $86.8 million in net proceedsfrom our public offering in May 2017. During the years ended December 31, 2016 and 2017, we received an aggregate of$30.5 million of net proceeds from sales of our common stock pursuant to our sales agreements with Cowen.Since inception, we have incurred significant operating losses. We have generated cumulative revenue of $58.6 millionsince our inception through December 31, 2017, primarily consisting of the $22.5 million upfront payment from Pfizer in2011, the $15.0 million non-refundable milestone payment in May 2014 and the $20.0 million non-refundable milestonepayment in August 2015. We had an accumulated deficit of $152.3 million as of December 31, 2017, and we expect tocontinue to incur significant expenses and operating losses over at least the next several years. Our net losses may fluctuatesignificantly from quarter to quarter and year to year, depending on the timing of our clinical trials, the receipt of milestonepayments, if any, under our collaboration with Pfizer, and our expenditures on other research and development activities. Weanticipate that our expenses will increase substantially as we:·initiate and conduct our planned clinical trials of GMI-1271 and GMI-1359;·continue the research and development of our other drug candidates;·seek to discover and develop additional drug candidates;·seek regulatory approvals for any drug candidates other than rivipansel that successfully complete clinical trials;·ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturingcapabilities to commercialize any drug candidates other than rivipansel for which we may obtain regulatoryapproval;·maintain, expand and protect our intellectual property portfolio;·hire additional clinical, quality control and scientific personnel; and·add operational, financial and management information systems and personnel, including personnel to support ourdrug development and potential future commercialization efforts.To fund further operations, we will need to raise capital. We may obtain additional financing in the future through theissuance of our common stock, through other equity or debt financings or through collaborations or partnerships with othercompanies. We may not be able to raise additional capital on terms acceptable to us, or at all, and any failure to raise capitalas and when needed could compromise our ability to execute on our business plan. Although it is difficult to predict futureliquidity requirements, we believe that our existing cash and cash equivalents, together with interest thereon, will besufficient to fund our operations at least through the end of 2019. However, our ability to successfully transition toprofitability will be dependent upon achieving a level of revenues adequate to support our cost structure. We cannot assureyou that we will ever be profitable or generate positive cash flow from operating activities.62 Table of ContentsOur Collaboration with PfizerIn October 2011, we entered into the license agreement with Pfizer under which we granted Pfizer an exclusiveworldwide license to develop and commercialize products containing rivipansel for all fields and uses. The license alsocovers specified back-up compounds along with modifications of and improvements to rivipansel that meet defined chemicalproperties. Pfizer is required to use commercially reasonable efforts, at its expense, to develop, obtain regulatory approval forand commercialize rivipansel for sickle cell disease in the United States. Under the terms of the agreement, we received a$22.5 million upfront payment. We are also eligible to earn potential milestone payments of up to $115.0 million upon theachievement of specified development milestones, including the dosing of the first patients in Phase 3 clinical trials for up totwo indications and the first commercial sale of a licensed product in the United States and selected European countries forup to two indications, up to $70.0 million upon the achievement of specified regulatory milestones, including theacceptance of our filings for regulatory approval by regulatory authorities in the United States and Europe for up to twoindications, and up to $135.0 million upon the achievement of specified levels of annual net sales of licensed products. Weare also eligible to receive tiered royalties for each licensed product, with percentages ranging from the low double digits tothe low teens, based on net sales worldwide, subject to reductions in specified circumstances. The first potential milestone payment under the Pfizer agreement was $35.0 million upon the initiation of dosing ofthe first patient in a Phase 3 clinical trial of rivipansel by Pfizer. Under the collaboration, Pfizer made a $15.0 million non-refundable milestone payment to us in May 2014, which we recognized as revenue in May 2014, when earned, and thedosing of the first patient in the Phase 3 clinical trial in June 2015 triggered the remaining $20.0 million milestone paymentto us. We recorded the $20.0 million milestone payment as revenue in June 2015. There were no milestone paymentsreceived from Pfizer for the years ended December 31, 2017 and 2016. We entered into a research services agreement with the University of Basel, or the University, for the discovery andevaluation of selectin antagonists. The research under this agreement has been completed; however, certain patents coveringthe rivipansel compound remain subject to provisions of the research services agreement. Under the terms of the ResearchAgreement, we will owe to the University 10% of all future milestone and royalty payments received from Pfizer with respectto rivipansel. In February 2016, we paid $2.0 million to the University based upon the non-refundable milestone paymentsfrom Pfizer. We recorded these payments during the year ended December 31, 2015, at the time the payments became due tothe University. There were no additional payments due to the University for the years ended December 31, 2017 and 2016.Critical Accounting Policies and Significant Judgments and EstimatesOur management’s discussion and analysis of our financial condition and results of operations is based on our financialstatements, which have been prepared in accordance with generally accepted accounting principles in the United States, orGAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect thereported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheetsand the reported amounts of revenue and expenses during the reporting periods. In accordance with GAAP, we base ourestimates on historical experience and on various other assumptions that we believe are reasonable under the circumstancesat the time such estimates are made. Actual results may differ materially from our estimates and judgments under differentassumptions or conditions. We periodically review our estimates in light of changes in circumstances, facts and experience.The effects of material revisions in estimates are reflected in our financial statements prospectively from the date of thechange in estimate.We define our critical accounting policies as those accounting principles generally accepted in the United States thatrequire us to make subjective estimates and judgments about matters that are uncertain and are likely to have a materialimpact on our financial condition and results of operations, as well as the specific manner in which we apply those principles.While our significant accounting policies are more fully described in Note 2 to our financial statements appearing elsewherein this Annual Report, we believe the following are the critical accounting policies used in the preparation of our financialstatements that require significant estimates and judgments.63 Table of Contents Revenue RecognitionLicense and Collaboration AgreementsWe have entered into a license agreement with Pfizer. Under the agreement, Pfizer made a nonrefundable $22.5 millionupfront payment to us in 2011, a $15.0 million milestone payment in 2014 and a $20.0 million milestone payment in 2015.Pfizer may become obligated to make additional milestone payments to us upon the achievement of significant clinicaldevelopment milestones, regulatory approvals and sales-based events.The agreement also contemplates royalty payments to us on any future net sales of rivipansel worldwide.Collaborative research and development agreements can provide for one or more of upfront license fees, researchpayments and milestone payments. Agreements with multiple components, such as deliverables or similar items, are referredto as multi-element revenue arrangements and are evaluated according to the provisions of Accounting StandardsCodification, or ASC, Topic 605-25, Revenue Recognition—Multiple-Element Arrangements, to determine whether thedeliverables can be separated into more than one unit of accounting. An item can generally be considered to be a separateunit of accounting if both of the following criteria are met:·the delivered item(s) has value to our customer on a standalone basis; and·the arrangement includes a general right of return relative to the delivered item(s), and delivery or performance ofthe undelivered item(s) is considered probable and substantially in our control.Items that cannot be divided into separate units are combined with other units of accounting, as appropriate.Consideration received is then allocated among the separate units based on a selling price hierarchy. The selling pricehierarchy for each deliverable is based on vendor-specific objective evidence, or VSOE, if it is available; third-partyevidence of selling price, or TPE, if VSOE is not available; or an estimated selling price, if neither VSOE nor TPE isavailable.Our license agreement with Pfizer represents a multiple-element revenue arrangement. To account for this transaction,we determined the elements, or deliverables, included in the arrangement and allocated arrangement consideration to thevarious elements based on each element’s relative selling price. The identification of individual elements in a multiple-element arrangement and the estimation of the selling price of each element involve significant judgment, includingconsideration as to whether each delivered element has standalone value to our collaborator.The primary deliverable under our license arrangement with Pfizer is an exclusive worldwide license to rivipansel,which is currently being developed to treat people experiencing VOC. The arrangement also includes deliverables related toresearch and preclinical development activities to be performed by us on Pfizer’s behalf and our participation on a jointsteering committee. We concluded that these deliverables should be accounted for as a single unit of accounting, and wetherefore determined to recognize the upfront payment of $22.5 million as revenue over the expected development period of1.5 years, which was the period over which we expected to provide our research and development services and participate onthe joint steering committee under the arrangement. Our determination of the appropriate length of the period over which torecognize revenue was consistent with the research plan agreed to with Pfizer and the actual development timeline.In reaching this conclusion, we evaluated whether the license to rivipansel has standalone value to Pfizer. Factors weconsidered in determining whether the license has standalone value included whether or not Pfizer can use the license for itsintended purpose without the receipt of the remaining deliverables, the value of the license without the undelivered items,Pfizer’s or other vendors’ ability to provide the undelivered items, the proprietary nature of the license and know-how, andthe availability of our glycomimetics expertise in the general marketplace. Based on all relevant facts and circumstances and,most significantly, on the proprietary nature of our platform and the related proprietary nature of our research services, weconcluded that standalone value does not exist for the license and, therefore, the license is not a separate unit of accountingunder the collaboration and should be combined with the research and development services we are obligated to provide,including our participation on the joint steering committee.64 Table of ContentsWe also evaluated whether our participation on the joint steering committee is a substantive obligation and therefore aseparate unit of accounting. The joint steering committee is responsible for overseeing the general working relationships,determining the protocols to be followed in the research and development performed and evaluating the results from thecontinued development of the drug candidate. The factors we considered in determining if our participation on the jointsteering committee is a substantive obligation included:·which party negotiated or requested the steering committee;·how frequently the steering committee meets;·whether or not there are any penalties or other recourse if we do not attend the steering committee meetings;·which party has decision-making authority on the steering committee; and·whether or not Pfizer has the requisite experience and expertise associated with the research and development ofrivipansel.We considered that we may terminate our participation on the joint steering committee at any point during theagreement. Further, the estimated selling price of our obligation was not material to the overall license agreement. Based onall relevant facts and circumstances, we concluded that our participation on the joint steering committee is not a substantiveobligation and, therefore, is not a separate unit of accounting under the collaboration.We were not able to establish VSOE or TPE for the separate unit deliverables under the arrangement with Pfizer, as wedo not have a history of entering into such arrangements or selling the individual deliverables within such arrangementsseparately. Accordingly, we determined that the selling price for the deliverables under the Pfizer license agreement shouldbe determined using the best estimate of selling price. The process of determining the best estimate of selling price involvedsignificant judgment on our part and included consideration of multiple factors, including market conditions and company-specific factors, such as those factors contemplated in negotiating the agreement and internally developed models thatincluded assumptions related to market opportunity, discounted cash flows, estimated development costs, probability ofsuccess and the time needed to commercialize a drug candidate pursuant to the license. In validating the best estimate ofselling price, we considered whether changes in key assumptions used to determine the best estimate of selling price wouldhave a significant effect on the allocation of the arrangement consideration between the multiple deliverables.Our license agreement with Pfizer also includes contingent milestone payments related to specified development,regulatory and commercial milestones. Pursuant to ASC-605-28, Revenue Recognition-Milestone Method, we may recognizerevenue contingent upon the achievement of a substantive milestone in its entirety in the period the milestone is achieved.Milestones are considered substantive if all of the following conditions are met:·the milestone is nonrefundable; ·achievement of the milestone was not reasonably assured at the inception of the arrangement;·substantive effort is involved to achieve the milestone;·the amount of the milestone appears reasonable in relation to the effort expended or the risk associated withachievement of the milestone; and·a reasonable amount of time passes between the upfront license payment and the first milestone payment, as wellas between each subsequent milestone payment.Our determination as to whether a payment meets these five conditions involves management’s judgment. If any ofthese conditions are not met, the resulting payment would not be considered a substantive milestone and would instead beconsidered part of the consideration for the single unit of accounting. In addition, if we determine that one milestone is notsubstantive, it could prevent us from concluding that subsequent milestones are substantive and, as a result, any additionalmilestone payments could also be considered part of the consideration for the single unit of accounting and would berecognized as revenue as those performance obligations are performed under either the proportional performance method orthe straight-line method.65 Table of ContentsWe have evaluated whether each milestone under the Pfizer arrangement is substantive and at risk to both parties onthe basis of the contingent nature of that milestone. This evaluation included an assessment of whether:·the consideration is commensurate with either our performance to achieve the milestone or the enhancement ofthe value of the delivered item(s) as a result of a specific outcome resulting from our performance to achieve themilestone;·the consideration relates solely to past performance; and·the consideration is reasonable relative to all of the deliverables and payment terms within the arrangement.Based on this evaluation, we concluded that the milestones under the Pfizer collaboration are substantive, due to theuncertainty of future clinical development success and the additional effort and time that is expected before the milestonescould be achieved. Accordingly, each milestone will be recognized as revenue upon its achievement, assuming all otherrevenue recognition criteria are met. Effective January 1, 2018, we adopted Accounting Standards Codification, or ASC, Topic 606, Revenue fromContracts with Customers, using the full retrospective transition method. Under this method, we will need to revise ourfinancial statements, if necessary, for the years ended December 31, 2015 and 2016, and applicable interim periods withinthose years, as if Topic 606 had been effective for those periods. This standard applies to all contracts with customers, exceptfor contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financialinstruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or servicesin an amount that reflects the consideration which the entity expects to receive in exchange for those goods and services. Todetermine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entityperforms the following five steps: (i) identify the contract(s) with the customer(s); (ii) identify the performance obligations inthe contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in thecontract; and (v) recognize revenue with the entity satisfies a performance obligation. We only apply the five-step model tocontracts when it is probable that we will collect the consideration to which we are entitled in exchange for the goods andservices we transfer to the customer. At contract inception, we assess the goods or services promised within each contract thatfalls under the scope of Topic 606 and determine those that are performance obligations, and assess whether each promisedgood or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to therespective performance obligation when (or as) the performance obligation is satisfied. We have analyzed the Pfizeragreement and have concluded that the transition to the new revenue standard will have no impact on prior reporting periods. Stock-Based CompensationWe issue stock-based compensation awards to our employees and non-employee directors, including stock options. Wemeasure stock-based compensation expense related to these awards based on the fair value of the award on the date of grantand recognize stock-based compensation expense on a straight-line basis over the requisite service period of the awards,which generally equals the vesting period. We grant stock options with exercise prices equal to the estimated fair value ofour common stock on the date of grant. We have selected the Black-Scholes-Merton option pricing model to determine thefair value of stock option awards, which requires the input of various assumptions that require management to applyjudgment and make assumptions and estimates, including:Risk-Free Interest Rate—The risk-free interest rate assumption is based on observed interest rates for constant maturityU.S. Treasury securities consistent with the expected life of our employee stock options.Expected Term—The expected life represents the period of time the stock options are expected to be outstanding andis based on the simplified method. Under the simplified method, the expected life of an option is presumed to be themidpoint between the vesting date and the end of the contractual term. We used the simplified method due to the lack ofsufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of thestock options.Expected Volatility—Expected volatility is based on the historical volatilities of a peer group of comparable publiclytraded companies with drug candidates in similar stages of development along with the Company’s historical volatility sinceits public offering, to determine its expected volatility.66 Table of ContentsExpected Dividend Yield—We have assumed no dividend yield because we do not expect to pay dividends in thefuture, which is consistent with our history of not paying dividends.Effective on January 1, 2017 with the adoption of ASU 2016-09, we have elected to account for forfeitures as theyoccur. We applied this change using a modified retrospective method through a cumulative-effect adjustment of $19,727 toaccumulated deficit as of January 1, 2017. Previously, the amount of stock-based compensation expense recognized during aperiod was based on the value of the portion of the awards that were ultimately expected to vest. The estimated pre-vestingforfeitures, or forfeiture rates, were based on our analysis of historical behavior by stock option holders. The estimatedforfeiture rate was applied to the total estimated fair value of the awards, as derived from the Black-Scholes-Merton model, tocompute the stock-based compensation expense, net of pre-vesting forfeitures, to be recognized in our statements ofoperations. We estimated forfeitures for employee grants at the time of grant and revised the estimates, if necessary, insubsequent periods if actual forfeitures differed from those estimates.Research and Development ExpensesResearch and development costs are charged to expense as incurred and include employee-related expenses, includingsalaries, benefits and travel, expenses incurred under agreements with CROs and investigative sites that conduct preclinicalstudies and clinical trials, as well as the cost of acquiring, developing and manufacturing clinical trial materials, facilities,depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities,insurance and other supplies and costs associated with preclinical activities and regulatory operations.We record costs for some development activities, such as clinical trials, based on our evaluation of the progress tocompletion of specific tasks using data such as patient enrollment, clinical site activations, or information provided to us byour vendors on their actual costs incurred. Payments for these activities are based on the terms of the individualarrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid oraccrued research and development expense, as the case may be.Income Taxes On December 22, 2017, the president signed into law the Tax Cuts and Jobs Act (H.R. 1), or the Act. The Act includes anumber of changes in existing tax law impacting businesses. One of the most significant changes is a permanent reduction inthe corporate income tax rate from 35% to 21%. The rate reduction took effect on January 1, 2018. However, we are requiredto recognize the effect of this rate change on our deferred tax assets and liabilities in 2017, the year in which the tax ratechange was enacted. The net deferred tax asset represents expected corporate tax benefits anticipated to be realized in thefuture. As a result of the reduction in rate, our deferred tax assets have been revalued with a reduction of $15.2 million, whichis offset by the related reduction in our valuation allowance. The SEC staff issued Staff Accounting Bulletin, or SAB, No.118, which will allow us to record provisional amounts during a measurement period which is similar to the measurementperiod used when accounting for business combinations. While we have substantially completed our provisional analysis ofthe income tax effects of this recent tax reform legislation, and recorded a reasonable estimate of such effects, the ultimateimpact may differ from these provisional amounts, possibly materially, due to, among other things, further refinement of ourcalculations, additional analysis, changes in assumptions, and actions we may take as a result of the Act.We recorded deferred tax assets of $56.4 million as of December 31, 2017, which have been fully offset by a valuationallowance due to uncertainties surrounding our ability to realize these tax benefits. The deferred tax assets are primarilycomposed of federal and state tax net operating loss, or NOL, carryforwards and research and development tax creditcarryforwards. As of December 31, 2017, we had federal and state NOL carryforwards of $112.0 million, research anddevelopment tax credit carryforwards of $8.0 million, and $13.3 million of orphan drug tax credit carryforwards available toreduce future taxable income, if any. A portion of the net operating loss carryforwards will begin to expire in 2026, theresearch and development tax credits in 2023 and the orphan drug tax credit in 2033. In general, if we experience a greaterthan 50 percentage point aggregate change in ownership of specified significant stockholders over a three-year period,utilization of our pre-change NOL carryforwards will be subject to an annual limitation under Section 382 of the U.S. InternalRevenue Code of 1986, as amended, and similar state laws. Such limitations may result in expiration of a portion of the NOLcarryforwards before utilization and may be substantial. If we experience a67 Table of ContentsSection 382 ownership change as a result of changes in our stock ownership, some of which changes may be outside ourcontrol, the tax benefits related to the NOL carryforwards may be further limited or lost.Components of Operating ResultsRevenue To date, we have not generated any revenue from the sale of our drug candidates and do not expect to generate anyrevenue from the sale of drugs in the near future. Substantially all of our revenue recognized to date has consisted of theupfront and milestone payments under our agreement with Pfizer.Since our inception, we have also recognized a nominal amount of revenue under research grant contracts, generally tothe extent of our costs incurred in connection with specific research or development activities.Research and DevelopmentResearch and development expenses consist of expenses incurred in performing research and development activities,including compensation and benefits for full-time research and development employees, facilities expenses, overheadexpenses, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, fees paid to CROs and otherconsultants and other outside expenses. Other preclinical research and platform programs include activities related toexploratory efforts, target validation, lead optimization for our earlier programs and our proprietary glycomimetics platform.To date, our research and development expenses have related primarily to the development of rivipansel and our otherdrug candidates. As of April 2013, when we completed our Phase 2 clinical trial of rivipansel, all further clinicaldevelopment obligations associated with rivipansel have shifted to Pfizer.We do not currently utilize a formal time allocation system to capture expenses on a project-by-project basis becausewe are organized and record expense by functional department and our employees may allocate time to more than onedevelopment project. Accordingly, we only allocate a portion of our research and development expenses by functional areaand by drug candidate.Research and development costs are expensed as incurred. Non-refundable advance payments for goods or services tobe received in the future for use in research and development activities are deferred and capitalized. The capitalized amountsare expensed as the related goods are delivered or the services are performed.Research and development activities are central to our business model. Drug candidates in later stages of clinicaldevelopment generally have higher development costs than those in earlier stages of clinical development, primarily due tothe increased size and duration of later stage clinical trials. We expect our research and development expenses to increaseover the next several years as we seek to progress GMI-1271, GMI-1359 and our other drug candidates through clinicaldevelopment. However, it is difficult to determine with certainty the duration and completion costs of our current or futurepreclinical studies and clinical trials of our drug candidates, or if, when or to what extent we will generate revenues from thecommercialization and sale of any of our drug candidates that obtain regulatory approval. We may never succeed inachieving regulatory approval for any of our drug candidates.The duration, costs and timing of clinical trials and development of our drug candidates will depend on a variety offactors that include:·per patient trial costs;·the number of patients that participate in the trials;·the number of sites included in the trials;·the countries in which the trial is conducted;·the length of time required to enroll eligible patients;68 Table of Contents·the number of doses that patients receive;·the drop-out or discontinuation rates of patients;·potential additional safety monitoring or other studies requested by regulatory agencies;·the duration of patient follow-up; and·the safety and efficacy profile of the drug candidate.In addition, the probability of success for each drug candidate will depend on numerous factors, including competition,manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund eachprogram in response to the scientific and clinical success of each drug candidate, as well as an assessment of each drugcandidate’s commercial potential.General and Administrative General and administrative expenses consist primarily of salaries and other related costs, including stock-basedcompensation, for personnel in executive, finance, accounting, business development and human resources functions. Othersignificant costs include facility costs not otherwise included in research and development expenses, legal fees relating topatent and corporate matters and fees for accounting and consulting services. We anticipate that our general andadministrative expenses will increase in the future to support our continued research and development activities.Other IncomeOther income consists of interest income earned on our cash and cash equivalents.Results of Operations for the Years Ended December 31, 2017 and 2016The following table sets forth our results of operations for the years ended December 31, 2017 and 2016. YEAR ENDEDPERIOD-TO DECEMBER 31, PERIOD(in thousands) 2017 2016 CHANGE Revenue $ — $18 $(18)Costs and expenses: Research and development expense 24,100 23,282 818General and administrative expense 9,832 8,650 1,182Total costs and expenses 33,932 31,932 2,000Loss from operations (33,932) (31,914) (2,018)Other income 651 104 547Net loss and comprehensive loss $(33,281) $(31,810) $(1,471)Research and Development Expense Research and development expense increased by $0.8 million to $24.1 million for the year ended December 31, 2017,from $23.3 million in the year ended December 31, 2016, reflecting an increase of 4%. This increase was primarily due to themanufacturing costs related to clinical supplies for GMI-1271 as we advance towards a planned Phase 3 clinical trial. Theseincreases were offset by a decrease in clinical development expenses as the GMI-1271 Phase 2 clinical trial enrollment wascompleted in May 2017. In addition, personnel-related and stock-based compensation expenses increased in 2017 byapproximately $0.9 million due to an increase in labor-related costs and stock-based compensation expense. The following table summarizes our research and development expense by functional area for the years endedDecember 31, 2017 and 2016: 69 Table of Contents YEAR ENDED PERIOD-TO DECEMBER 31, PERIOD (in thousands) 2017 2016 CHANGE Clinical development $5,700 $7,729 $(2,029) Manufacturing and formulation 6,625 4,449 2,176 Contract research services, consulting and other costs 1,575 1,998 (423) Laboratory costs 1,923 1,719 204 Personnel-related 6,996 6,354 642 Stock-based compensation 1,281 1,033 248 Research and development expense $24,100 $23,282 $818 The following table summarizes our research and development expense by drug candidate for the years endedDecember 31, 2017 and 2016: YEAR ENDED PERIOD-TO DECEMBER 31, PERIOD (in thousands) 2017 2016 CHANGE GMI-1271 $12,488 $10,483 $2,005 GMI-1359 806 2,875 (2,069) Other research and development 2,529 2,537 (8) Personnel-related and stock-based compensation 8,277 7,387 890 Research and development expense $24,100 $23,282 $818 General and Administrative ExpenseThe following table discloses the components of our general and administrative expense for the year ended December31, 2017 and 2016: YEAR ENDED PERIOD-TO DECEMBER 31, PERIOD (in thousands) 2017 2016 CHANGE Personnel-related $3,183 $2,829 $354 Stock-based compensation 2,480 1,932 548 Legal, consulting and other professional expenses 3,466 3,249 217 Other 703 640 63 General and administrative expense $9,832 $8,650 $1,182 General and administrative expense increased for the year ended December 31, 2017 by $1.2 million, or 14%,compared to 2016 primarily due to an increase in labor-related costs and stock-based compensation expense.Results of Operations for the Years Ended December 31, 2016 and 2015The following table sets forth our results of operations for the years ended December 31, 2016 and 2015. YEAR ENDED PERIOD-TO DECEMBER 31, PERIOD (in thousands) 2016 2015 CHANGE Revenue $18 $20,071 $(20,053) Costs and expenses: Research and development expense 23,282 25,050 (1,768) General and administrative expense 8,650 7,805 845 Total costs and expenses 31,932 32,855 (923) Loss from operations (31,914) (12,784) (19,130) Other income 104 15 89 Net loss and comprehensive loss $(31,810) $(12,769) $(19,041) 70 Table of ContentsRevenue Our revenue for the year ended December 31, 2016 was not material. The revenue recorded in the year ended December31, 2015 was due to the $20.0 million non-refundable milestone payment from Pfizer triggered upon the dosing of the firstpatient in the Phase 3 clinical trial of rivipansel. There were no milestone or royalty payments due from Pfizer during the yearended December 31, 2016.Research and Development Expense Research and development expense decreased by $1.8 million to $23.3 million for the year ended December 31, 2016,from $25.1 million in the year ended December 31, 2015, reflecting a decrease of 7%. This decrease was primarily due to amilestone license fee of $2.0 million payable to the University based on a Pfizer milestone payment received during the yearended December 31, 2015 that did not recur during the year ended December 31, 2016. As part of the original considerationfor entering into an agreement with the University, we granted to the University the right to receive 10% of payments relatedto rivipansel under specified circumstances including any future milestone payments or royalties we receive from Pfizer. Themilestone license fee reflected in the year ended December 31, 2015 was based on 10% of the associated non-refundablemilestone payments of $20 million due from Pfizer to us. In contrast, there were no milestone or royalties received fromPfizer in year ended December 31, 2016. In addition, during the year ended December 31, 2016, as compared to the sameperiods in 2015, there was an increase in the costs associated with the clinical development for GMI-1271 and GMI-1359 of$3.6 million offset by a decrease in expenses related to manufacturing and process development for GMI-1271 of $4.3million. 71 Table of ContentsThe following table summarizes our research and development expense by functional area for the years endedDecember 31, 2016 and 2015: YEAR ENDED PERIOD-TO DECEMBER 31, PERIOD (in thousands) 2016 2015 CHANGE Clinical development $7,729 $4,135 $3,594 Manufacturing and formulation 4,449 8,769 (4,320) Contract research services, consulting and other costs 1,998 2,285 (287) Laboratory costs 1,719 1,508 211 Personnel-related 6,354 5,549 805 Stock-based compensation 1,033 802 231 Milestone license fee — 2,002 (2,002) Research and development expense $23,282 $25,050 $(1,768) The following table summarizes our research and development expense by drug candidate for the years endedDecember 31, 2016 and 2015: YEAR ENDED PERIOD-TO DECEMBER 31, PERIOD (in thousands) 2016 2015 CHANGE GMI-1271 $10,483 $10,770 $(287) GMI-1359 2,875 3,256 (381) Rivipansel — 2,026 (2,026) Other research and development 2,537 2,647 (110) Personnel-related and stock-based compensation 7,387 6,351 1,036 Research and development expense $23,282 $25,050 $(1,768) General and Administrative ExpenseThe following table discloses the components of our general and administrative expense for the year ended December31, 2016 and 2015: YEAR ENDED PERIOD-TO DECEMBER 31, PERIOD (in thousands) 2016 2015 CHANGE Personnel-related $2,829 $2,363 $466 Stock-based compensation 1,932 1,521 411 Legal, consulting and other professional expenses 3,249 3,334 (85) Other 640 587 53 General and administrative expense $8,650 $7,805 $845 General and administrative expense increased for the year ended December 31, 2016 by $845,000, or 11%, comparedto 2015 primarily due to an increase in labor-related costs and stock-based compensation expense. Liquidity and Capital ResourcesSources of Liquidity We have financed our operations primarily through private placements of our capital stock, our IPO, sales agreementswith Cowen, our public offerings in June 2016 and May 2017 and upfront and milestone payments from Pfizer. As ofDecember 31, 2017, we had $123.9 million in cash and cash equivalents. We are potentially eligible to earn a significant amount of milestone payments and royalties under our agreement withPfizer. Our ability to earn these payments and their timing is dependent upon the outcome of Pfizer’s activities and isuncertain at this time. On March 1, 2016, we entered into an at-the-market sales agreement with Cowen to sell shares of our common stockhaving an aggregate offering price of up to $40.0 million through Cowen acting as our sales agent. During the year endedDecember 31, 2017, we sold an aggregate of 1,388,647 shares of our common stock under the at-the-market72 Table of Contentsfacility, for net proceeds of $7.4 million. We and Cowen terminated the agreement in May 2017. As of its termination , wehad sold an aggregate of 2,057,438 shares for net proceeds of $11.3 million under the at-the-market facility. In May 2017, we completed a public offering in which we sold 8,050,000 shares of our common stock at a price to thepublic of $11.50 per share. We received net proceeds of $86.8 million from this offering, after deducting underwritingdiscounts, commissions and other offering expenses. On September 28, 2017, we entered into a new at-the-market sales agreement with Cowen, under which we may offerand sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to$100.0 million through Cowen acting as our sales agent. As of December 31, 2017, we have sold an aggregate of 1,600,000shares of our common stock under the new at-the-market facility, for net proceeds of $19.3 million. Funding Requirements Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-partyclinical research and development services, laboratory and related supplies, clinical costs, legal and other regulatoryexpenses and general overhead costs. The successful development of any of our drug candidates is highly uncertain. As such, at this time, we cannotreasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of thedevelopment of GMI-1271 or our other drug candidates. We are also unable to predict when, if ever, material net cash inflowswill commence from rivipansel or GMI-1271. This is due to the numerous risks and uncertainties associated with developingdrugs, including the uncertainty of: ·successful enrollment in, and completion of, clinical trials; ·receipt of marketing approvals from applicable regulatory authorities; ·establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; ·obtaining and maintaining patent and trade secret protection and regulatory exclusivity for drug candidates; ·launching commercial sales of drugs, if and when approved, whether alone or in collaboration with others; and ·obtaining and maintaining healthcare coverage and adequate reimbursement. A change in the outcome of any of these variables with respect to the development of any of our drug candidates wouldsignificantly change the costs and timing associated with the development of that drug candidate. Because our drugcandidates are in various stages of clinical and preclinical development and the outcome of these efforts is uncertain, wecannot estimate the actual amounts necessary to successfully complete the development and commercialization of our drugcandidates or whether, or when, we may achieve profitability. Until such time, if ever, as we can generate substantial productrevenues, we expect to finance our cash needs through a combination of equity or debt financings and collaborationarrangements, including our existing collaboration with Pfizer. Except for Pfizer’s obligation to make milestone paymentsunder our agreement with them, we do not have any committed external source of liquidity. To the extent that we raise additional capital through the future sale of equity or debt, the ownership interest of ourstockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adverselyaffect the rights of our existing common stockholders. If we raise additional funds through the issuance of convertible debtsecurities, these securities could contain covenants that would restrict our operations. We may require additional capital beyond our currently anticipated amounts. Additional capital may not be availableon reasonable terms, or at all. If we raise additional funds through collaboration arrangements in the future, we may have torelinquish valuable rights to our drug candidates or grant licenses on terms that may not be favorable to us. If we are unableto raise additional funds through equity or debt financings when needed, we may be required to delay,73 Table of Contentslimit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and marketdrug candidates that we would otherwise prefer to develop and market ourselves. Outlook Based on our research and development plans and our timing expectations related to the progress of our programs, weexpect that our existing cash and cash equivalents as of December 31, 2017 will enable us to fund our operating expensesand capital expenditure requirements at least through the end of 2019. We have based this estimate on assumptions that mayprove to be wrong, and we could use our capital resources sooner than we expect. Additionally, the process of testing drugcandidates in clinical trials is costly, and the timing of progress in these trials is uncertain. Cash FlowsThe following table summarizes our cash flows for the years ended December 31, 2017, 2016 and 2015. YEAR ENDED DECEMBER 31, (in thousands) 2017 2016 2015 Net cash provided by (used in): Operating activities $(29,768) $(29,731) $(8,242) Investing activities (294) (704) (269) Financing activities 113,945 23,674 114 Net change in cash and cash equivalents $83,883 $(6,761) $(8,397) In assessing cash used in operating activities, we consider several principal factors: (i) net loss for the period; (ii)adjustments for non-cash charges including stock-based compensation expense and depreciation and amortization ofproperty and equipment; and (iii) the extent to which receivables, accounts payable and other liabilities, or other workingcapital components increase or decrease.Year Ended December 31, 2017 compared to Year Ended December 31, 2016Operating ActivitiesNet cash used in operating activities was $29.8 million during the year ended December 31, 2017 compared to $29.7million during the year ended December 31, 2016. For the year ended December 31, 2017, there was an increase in cashoutlays to reserve manufacturing facilities in 2018 for the production of GMI-1271. These prepaid expenses were offset by adecrease in costs for clinical expenses related to GMI-1271 and GMI-1359.Investing ActivitiesNet cash used in investing activities was $294,000 for the year ended December 31, 2017 compared to $704,000during the year ended December 31, 2016. Net cash used in investing activities for the year ended December 31, 2017 relatedto the costs associated with purchases of scientific equipment and computers. Net cash used in investing activities for theyear ended December 31, 2016 related to the costs associated with the build-out of our additional leased space.Financing ActivitiesNet cash provided by financing activities of $113.5 million during the year ended December 31, 2017 reflected netproceeds received from our public offering of $86.8 million in May 2017, $26.7 million received from our at-the-marketfacilities with Cowen and $0.4 million in proceeds from stock option exercises. Net cash provided by financing activities of$23.7 million during the year ended December 31, 2016 reflected net proceeds received from our public offering of $19.7million in June 2016 and $3.9 million received from our at-the-market facility with Cowen.74 Table of ContentsYear Ended December 31, 2016 compared to Year Ended December 31, 2015Operating ActivitiesNet cash used in operating activities was $29.7 million during the year ended December 31, 2016 compared to $8.2million during the year ended December 31, 2015. For the year ended December 31, 2015, we received a $20.0 million non-refundable milestone payment from Pfizer. In contrast, we did not receive any milestone payments in the year endedDecember 31, 2016. In addition, there was an increase in expenses of $3.6 million related to clinical development for GMI-1271 and GMI-1359 in 2016 as compared to 2015. Investing ActivitiesNet cash used in investing activities was $704,000 for the year end December 31, 2016 compared to $269,000 duringthe year ended December 31, 2015. Net cash used in investing activities for the year ended December 31, 2016 related to thecosts associated with the build-out of our additional leased space. Net cash used in investing activities for the year endedDecember 31, 2015 was the result of purchases of additional furniture and equipment related to moving into our new officeheadquarters in June 2015.Financing ActivitiesNet cash provided by financing activities of $23.7 million during the year ended December 31, 2016 reflected netproceeds received from our public offering of $19.7 million in June 2016 and $3.9 million received from our at-the-marketfacility with Cowen. Net cash provided by financing activities of $114,000 during the year ended December 31, 2015 wascomprised primarily of employee stock option exercises. Contractual Obligations As of December 31, 2017, our significant contractual obligations consisted solely of rent obligations under a non-cancelable lease, as amended, for our current office space in Rockville, Maryland, which has a term through October 2023.The following table depicts our obligations under this lease as of December 31, 2017. Payments Due by Period After Total 2018 2019 2020 2021 2022 2022 (In thousands) Operating lease $5,981 $965 $990 $1,014 $1,040 $1,066 $906 The foregoing table does not include various agreements that we have entered into for services with third-partyvendors, including agreements to conduct clinical trials, to manufacture products, and for consulting and other contractedservices due to the cancelable nature of the services. We accrue the costs of these agreements based on estimates of workcompleted to date.The contractual obligations table does not include any potential future payments we may be required to make underour research agreement with the University, under which we have agreed to pay 10% of any future milestone payments orroyalties we may receive from Pfizer with respect to rivipansel. Due to the uncertainty of the achievement and timing of theevents requiring payment under that agreement, the amounts to be paid by us cannot be determined as of the date of thisreport.Off-Balance Sheet ArrangementsWe did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, asdefined under SEC rules.75 Table of ContentsJOBS ActIn April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107(b) of theJOBS Act provides that an emerging growth company can take advantage of an extended transition period for complyingwith new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accountingstandards until those standards would otherwise apply to private companies. We have irrevocably elected not to availourselves of this extended transition period, and, as a result, we will adopt new or revised accounting standards on therelevant dates on which adoption of such standards is required for other public companies. ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThe market risk inherent in our financial instruments and in our financial position represents the potential loss arisingfrom adverse changes in interest rates. As of December 31, 2017 and 2016, we had cash and cash equivalents of $123.9million and $40.0 million, respectively. We generally hold our cash in interest-bearing money market accounts. Our primaryexposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Dueto the short-term maturities of our cash equivalents and the low risk profile of our investments, an immediate 100 basis pointchange in interest rates would not have a material effect on the fair market value of our cash equivalents. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and related financial statement schedules required to be filed are listed in the Index toFinancial Statements and are incorporated herein. ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURENone. ITEM 9A.CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and ProceduresUnder the supervision of and with the participation of our management, including our chief executive officer, who isour principal executive officer, and our chief financial officer, who is our principal financial officer, we conducted anevaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2017, the end of the periodcovered by this Annual Report. The term “disclosure controls and procedures,” as set forth in Rules 13a-15(e) and 15d-15(e)under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of acompany that are designed to provide reasonable assurance that information required to be disclosed by a company in thereports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the timeperiods specified in the rules and forms promulgated by the SEC. Disclosure controls and procedures include, withoutlimitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reportsthat it files or submits under the Exchange Act is accumulated and communicated to the company’s management, includingits principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.Management recognizes that any controls and procedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures asof December 31, 2017, our chief executive officer and chief financial officer concluded that, as of such date, our disclosurecontrols and procedures were effective at the reasonable assurance level.Management’s Report on Internal Control over Financial Reporting and Attestation Report of the Registered PublicAccounting FirmOur management is responsible for establishing and maintaining an adequate system of internal control over financialreporting, as defined in the Exchange Act Rule 13a-15(f). Management conducted an assessment of our internal control overfinancial reporting based on the original framework established in 2013 by the Committee of Sponsoring76 Table of ContentsOrganizations of the Treadway Commission in Internal Control—Integrated Framework. Based on the assessment,management concluded that, as of December 31, 2017, our internal control over financial reporting was effective.This Annual Report does not include an attestation report of our registered public accounting firm regarding internalcontrol over financial reporting as required by Section 404(c) of the Sarbanes Oxley Act of 2002. Because we qualify as anemerging growth company under the JOBS Act, management's report was not subject to attestation by our independentregistered public accounting firm.Changes in Internal Control over Financial ReportingThere was no change in our internal control over financial reporting identified in connection with the evaluationrequired by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2017that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B.OTHER INFORMATION None. 77 Table of Contents PART III We will file a definitive proxy statement for our 2018 annual meeting of stockholders, or the 2018 Proxy Statement,with the SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certaininformation required by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of the2018 Proxy Statement that specifically address the items set forth herein are incorporated by reference. ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by Item 10 is hereby incorporated by reference to the relevant information to be included inthe 2018 Proxy Statement under the captions “Information Regarding the Board of Directors and Corporate Governance,”“Election of Directors,” “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance.” ITEM 11.EXECUTIVE COMPENSATION The information required by Item 11 is hereby incorporated by reference to the relevant information to be included inthe 2018 Proxy Statement under the captions “Executive Compensation” and “Non-Employee Director Compensation.” ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDER MATTERSThe information required by Item 12 is hereby incorporated by reference to the relevant information to be included inthe 2018 Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners and Management” and“Securities Authorized for Issuance under Equity Compensation Plans.” ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCEThe information required by Item 13 is hereby incorporated by reference to the relevant information to be included inthe 2018 Proxy Statement under the captions “Transactions with Related Persons” and “Independence of the Board ofDirectors.” ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by Item 14 is hereby incorporated by reference to the relevant information to be included inthe 2018 Proxy Statement under the caption “Ratification of Selection of Independent Auditors.”78 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements: Report of Ernst & Young LLP, Independent Registered Public Accounting Firm 85Balance Sheets 86Statements of Operations and Comprehensive Loss 87Statements of Stockholders’ Equity 88Statements of Cash Flows 89Notes to Financial Statements 90 (2) Financial Statements Schedules: All financial statement schedules have been omitted because they are not applicable, not required or theinformation required is shown in the financial statements or the notes thereto. (3) Exhibits ExhibitNumber Description of Document 3.1(1)Amended and Restated Certificate of Incorporation. 3.2(2)Amended and Restated Bylaws. 4.1(3)Specimen stock certificate evidencing shares of Common Stock. 10.1*(4)License Agreement, dated as of October 7, 2011, as amended to date, by and between the Registrant andPfizer Inc. 10.2(5)Second Amended and Restated Investor Rights Agreement, dated as of October 20, 2009, by and amongthe Registrant and certain of its stockholders. 10.3(6)Form of Common Stock Warrant issued in July 2008 bridge financing. 10.4(7)Form of Common Stock Warrant issued in January 2009 bridge financing. 10.5+(8)2003 Stock Incentive Plan, as amended. 10.6+(9)Form of Incentive Stock Option Agreement under 2003 Stock Incentive Plan. 10.7+(10)Form of Nonqualified Stock Option Agreement under 2003 Stock Incentive Plan. 10.8+(11)2013 Equity Incentive Plan. 10.9+(12)Form of Stock Option Grant Notice and Stock Option Agreement under 2013 Equity Incentive Plan. 10.10+(13)Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement under 2013Equity Incentive Plan. 10.11+(14)2013 Employee Stock Purchase Plan.79 Table of ContentsExhibitNumber Description of Document 10.12+(15)Form of Indemnification Agreement. 10.13+(16)Amended and Restated Employment Agreement, dated as of January 15, 2014, by and between theRegistrant and Rachel King. 10.14+(17)Amended and Restated Employment Agreement, dated as of January 15, 2014, by and between theRegistrant and Brian Hahn. 10.15+(18)Amended and Restated Employment Agreement, dated as of January 15, 2014, by and between theRegistrant and Helen Thackray. 10.16+(19)Executive Employment Agreement, dated as of May 19, 2003, by and between the Registrant and JohnMagnani. 10.17+(20)Non-Employee Director Compensation Policy. 10.18(21)Lease Agreement, dated July 23, 2014, by and between the Registrant and BMR-Medical Center Drive,LLC. 10.19(22)Sales Agreement, dated September 28, 2017 by and between the Registrant and Cowen and Company,LLC. 10.20(23)First Amendment to Lease, dated March 24, 2016, by and between the Registrant and BMR-MedicalCenter Drive LLC. 23.1Consent of Ernst & Young LLP, independent registered public accounting firm. 24.1Power of Attorney (contained on signature page hereto). 31.1Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated underthe Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of2002. 31.2Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated underthe Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of2002. 32.1^Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(b) and15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adoptedpursuant to section 906 of The Sarbanes-Oxley Act of 2002.101.INSXBRL Instance Document101.SCHXBRL Taxonomy Extension Schema Document101.CALXBRL Taxonomy Extension Calculation Linkbase Document101.DEFXBRL Taxonomy Extension Definition Linkbase Document101.LABXBRL Taxonomy Extension Label Linkbase Document101.PREXBRL Taxonomy Extension Presentation Linkbase Document 80 Table of Contents^These certifications are being furnished solely to accompany this Annual Report pursuant to 18 U.S.C. Section 1350,and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not tobe incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless ofany general incorporation language in such filing.+Indicates management contract or compensatory plan.*Confidential treatment has been granted with respect to portions of this exhibit (indicated by asterisks) and thoseportions have been separately filed with the Securities and Exchange Commission.(1)Previously filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36177), filed with theCommission on January 15, 2014, and incorporated by reference herein.(2)Previously filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36177), filed with theCommission on January 15, 2014, and incorporated by reference herein.(3)Previously filed as Exhibit 4.2 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1(File No. 333-191567), filed with the Commission on October 31, 2013, and incorporated by reference herein.(4)Previously filed as Exhibit 10.1 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1(File No. 333-191567), filed with the Commission on October 31, 2013, and incorporated by reference herein.(5)Previously filed as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-191567), filedwith the Commission on October 4, 2013, and incorporated by reference herein.(6)Previously filed as Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 (File No. 333-191567), filedwith the Commission on October 4, 2013, and incorporated by reference herein.(7)Previously filed as Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1 (File No. 333-191567), filedwith the Commission on October 4, 2013, and incorporated by reference herein.(8)Previously filed as Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 (File No. 333-191567), filedwith the Commission on October 4, 2013, and incorporated by reference herein.(9)Previously filed as Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1 (File No. 333-191567), filedwith the Commission on October 4, 2013, and incorporated by reference herein.(10)Previously filed as Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 (File No. 333-191567), filedwith the Commission on October 4, 2013, and incorporated by reference herein.(11)Previously filed as Exhibit 10.11 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1(File No. 333-191567), filed with the Commission on October 28, 2013, and incorporated by reference herein.(12)Previously filed as Exhibit 10.12 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1(File No. 333-191567), filed with the Commission on October 28, 2013, and incorporated by reference herein.(13)Previously filed as Exhibit 10.13 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1(File No. 333-191567), filed with the Commission on October 28, 2013, and incorporated by reference herein.(14)Previously filed as Exhibit 10.14 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1(File No. 333-191567), filed with the Commission on October 28, 2013, and incorporated by reference herein.(15)Previously filed as Exhibit 10.15 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1(File No. 333-191567), filed with the Commission on October 28, 2013, and incorporated by reference herein.(16)Previously filed as Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K (File No. 001-36177), filed with theCommission on March 31, 2014, and incorporated by reference herein.(17)Previously filed as Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K (File No. 001-36177), filed with theCommission on March 31, 2014, and incorporated by reference herein.(18)Previously filed as Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K (File No. 001-36177), filed with theCommission on March 31, 2014, and incorporated by reference herein.81 Table of Contents(19)Previously filed as Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K (File No. 001-36177), filed with theCommission on March 31, 2014, and incorporated by reference herein.(20)Previously filed as Exhibit 10.17 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1(File No. 333-191567), filed with the Commission on December 20, 2013, and incorporated by reference herein. (21)Previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36177), filed with theCommission on July 28, 2014, and incorporated by reference herein.(22)Previously filed as Exhibit 1.2 to the Registrant’s Registration Statement on Form S-3 (File No. 333-220697), filed withthe Commission on September 28, 2017, and incorporated by reference herein.(23)Previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36177), filed with theCommission on March 29, 2016, and incorporated by reference herein. ITEM 16. FORM 10-K SUMMARY Not applicable82 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registranthas duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GLYCOMIMETICS, INC. By: /s/ Rachel K. King Rachel K. King President and Chief Executive Officer March 6, 2018KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes andappoints Rachel K. King and Brian M. Hahn, jointly and severally, as his or her true and lawful attorneys-in-fact and agents,with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and allcapacities, to sign this Annual Report on Form 10-K of GlycoMimetics, Inc., and any or all amendments thereto, and to filethe same, with all exhibits thereto, and other documents in connection therewith, with the Securities and ExchangeCommission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every actand thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said attorneys-in-fact and agents, or his, her or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below bythe following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Rachel K. King Rachel K. KingPresident, Chief Executive Officer and Director(Principal Executive Officer)March 6, 2018/s/ Brian M. Hahn Brian M. HahnChief Financial Officer(Principal Financial Officer and Principal Accounting Officer)March 6, 2018/s/ Patricia S. Andrews Patricia S. AndrewsDirectorMarch 6, 2018/s/ M. James Barrett, Ph.D. M. James Barrett, Ph.D.DirectorMarch 6, 2018/s/ Mark A. Goldberg M.D. Mark A. Goldberg M.D.DirectorMarch 6, 2018/s/ Daniel M. Junius Daniel M. JuniusDirectorMarch 6, 2018/s/ Scott Koenig, M.D., Ph.D. Scott Koenig, M.D., Ph.D.DirectorMarch 6, 2018/s/ John L. Magnani, Ph.D. John L. Magnani, Ph.D.DirectorMarch 6, 2018/s/ Timothy Pearson Timothy PearsonDirectorMarch 6, 2018 83 Table of Contents INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm 85Balance Sheets as of December 31, 2017 and 2016 86Statements of Operations and Comprehensive Loss for the years ended December 31, 2017, 2016 and 2015 87Statements of Stockholders’ Equity for the years ended December 31, 2017, 2016 and 2015 88Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015 89Notes to Financial Statements 90 84 Table of ContentsReport of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of GlycoMimetics, Inc. Opinion on the Financial StatementsWe have audited the accompanying balance sheets of GlycoMimetics, Inc. (the Company) as of December 31, 2017and 2016, the related statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the threeyears in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). Inour opinion, the financial statements present fairly, in all material respects, the financial position of the Company atDecember 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the periodended December 31, 2017, in conformity with U.S. generally accepted accounting principles. Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express anopinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with thePublic Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect tothe Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities andExchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internalcontrol over financial reporting. As part of our audits we are required to obtain an understanding of internal control overfinancial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controlover financial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements,whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, ona test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluatingthe accounting principles used and significant estimates made by management, as well as evaluating the overall presentationof the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2011.Tysons, VirginiaMarch 6, 2018 85 Table of ContentsGLYCOMIMETICS, INC.Balance Sheets December 31, December 31, 2017 2016 Assets Current assets: Cash and cash equivalents $123,924,738 $40,041,641 Prepaid expenses and other current assets 3,294,884 478,503 Total current assets 127,219,622 40,520,144 Property and equipment, net 1,106,899 1,056,332 Prepaid research and development expenses 204,364 759,531 Deposits 52,320 52,320 Total assets $128,583,205 $42,388,327 Liabilities & stockholders’ equity Current liabilities: Accounts payable $2,647,091 $1,565,210 Accrued bonuses 1,883,051 1,432,485 Accrued expenses 3,566,607 3,267,371 Deferred rent 78,028 68,551 Total current liabilities 8,174,777 6,333,617 Deferred rent, net of current portion 707,003 753,579 Total liabilities 8,881,780 7,087,196 Stockholders’ equity: Preferred stock; $0.001 par value; 5,000,000 shares authorized, no shares issuedand outstanding at December 31, 2017 and December 31, 2016 — — Common stock; $0.001 par value; 100,000,000 shares authorized, 34,359,799shares issued and outstanding at December 31, 2017; 100,000,000 sharesauthorized, 23,250,023 shares issued and outstanding at December 31, 2016 34,358 23,249 Additional paid-in capital 271,944,173 154,254,193 Accumulated deficit (152,277,106) (118,976,311) Total stockholders’ equity 119,701,425 35,301,131 Total liabilities and stockholders’ equity $128,583,205 $42,388,327 See accompanying notes.86 Table of ContentsGLYCOMIMETICS, INC.Statements of Operations and Comprehensive Loss Year Ended December 31, 2017 2016 2015 Revenue $ — $18,500 $20,070,750 Costs and expenses: Research and development expense 24,100,092 23,281,820 25,050,179 General and administrative expense 9,832,188 8,650,165 7,805,396 Total costs and expenses 33,932,280 31,931,985 32,855,575 Loss from operations (33,932,280) (31,913,485) (12,784,825) Other income 651,212 103,647 15,327 Net loss and comprehensive loss $(33,281,068) $(31,809,838) $(12,769,498) Basic and diluted net loss per common share $(1.13) $(1.50) $(0.67) Basic and diluted weighted average number of common shares 29,395,756 21,256,312 19,010,587 See accompanying notes.87 Table of ContentsGLYCOMIMETICS, INC.Statements of Stockholders’ Equity Additional Total Common Stock Paid-In Accumulated Stockholders’ Shares Amount Capital Deficit Equity Balance at December 31, 2014 18,939,838 $ 18,940 $125,181,463 $(74,396,975) $50,803,428 Exercise of options and warrants 110,366 109 114,012 — 114,121 Stock-based compensation — — 2,323,603 — 2,323,603 Net loss — — — (12,769,498) (12,769,498) Balance at December 31, 2015 19,050,204 19,049 127,619,078 (87,166,473) 40,471,654 Issuance of common stock, net of issuance costs 4,145,584 4,146 23,597,809 — 23,601,955 Exercise of options and warrants 54,235 54 72,539 — 72,593 Stock-based compensation — — 2,964,767 — 2,964,767 Net loss — — — (31,809,838) (31,809,838) Balance at December 31, 2016 23,250,023 23,249 154,254,193 (118,976,311) 35,301,131 Cumulative effect of adoption of ASU No. 2016-09 forstock-based compensation forfeitures — — 19,727 (19,727) — Issuance of common stock, net of issuance costs 11,038,647 11,038 113,536,146 — 113,547,184 Exercise of options 71,129 71 373,305 — 373,376 Stock-based compensation — — 3,760,802 — 3,760,802 Net loss — — — (33,281,068) (33,281,068) Balance at December 31, 2017 34,359,799 $34,358 $271,944,173 $(152,277,106) $119,701,425 See accompanying notes.88 Table of ContentsGLYCOMIMETICS, INC.Statements of Cash Flows Year Ended December 31, 2017 2016 2015 Operating activities Net loss $(33,281,068) $(31,809,838) $(12,769,498) Adjustments to reconcile net loss to net cash used in operatingactivities: Depreciation 263,541 190,540 191,484 Loss on disposal of property and equipment — — 8,001 Stock-based compensation expense 3,760,802 2,964,767 2,323,603 Changes in assets and liabilities: Prepaid expenses and other current assets (2,816,381) (36,693) 474,439 Prepaid research and development expenses 555,167 (63,000) — Deposits — (52,320) — Accounts payable 1,061,880 1,000,975 (309,792) Accrued expenses and bonuses 724,797 (2,504,179) 1,693,238 Deferred rent (37,099) 578,483 146,635 Net cash used in operating activities (29,768,361) (29,731,265) (8,241,890) Investing activities Purchases of property and equipment (294,107) (704,202) (268,594) Net cash used in investing activities (294,107) (704,202) (268,594) Financing activities Proceeds from issuance of common stock, net of issuance costs 113,572,189 23,601,955 — Proceeds from exercise of stock options 373,376 72,593 114,121 Net cash provided by financing activities 113,945,565 23,674,548 114,121 Net change in cash and cash equivalents 83,883,097 (6,760,919) (8,396,363) Cash and cash equivalents, beginning of period 40,041,641 46,802,560 55,198,923 Cash and cash equivalents, end of period $123,924,738 $40,041,641 $46,802,560 Non-cash investing and financing activities Property acquisition costs included in accounts payable and accruedexpenses $20,000 $21,292 $ — Issuance costs associated with financing included in accounts payableand accrued expenses $25,005 $ — $ — See accompanying notes.89 Table of ContentsGLYCOMIMETICS, INC.Notes to Financial Statements 1. Description of the BusinessGlycoMimetics, Inc. (the Company), a Delaware corporation headquartered in Rockville, Maryland, was incorporatedon April 4, 2003 and commenced operations on May 21, 2003. The company is a clinical stage biotechnology companyfocused on the discovery and development of novel glycomimetic drugs to address unmet medical needs resulting fromdiseases in which carbohydrate biology plays a key role. Glycomimetics are molecules that mimic the structure ofcarbohydrates involved in important biological processes. Using its expertise in carbohydrate chemistry and knowledge ofcarbohydrate biology, the Company is developing a pipeline of proprietary glycomimetics that inhibit disease-relatedfunctions of carbohydrates, such as the roles they play in inflammation, cancer and infection.The Company’s executive personnel have devoted substantially all of their time to date to the planning andorganization of the Company, the process of hiring scientists, initiating research and development programs and securingadequate capital for anticipated growth and operations. The Company has not commercialized any of its drug candidates andplanned commercial operations have not commenced. The Company has incurred significant losses in the development of itsdrug candidates. The losses in prior periods were primarily attributable to the research and development of the Company’sfirst drug candidate, rivipansel, as well as GMI-1271 and GMI-1359. The Company has not generated revenues from productsales. As a result, the Company has consistently reported negative cash flows from operating activities and net losses, had anaccumulated deficit of $152,277,106 at December 31, 2017 and expects to continue incurring losses for the foreseeablefuture. The Company currently anticipates that its cash and cash equivalents will be sufficient to meet its anticipated cashrequirements through the end of 2019.The Company’s operations are subject to certain risks and uncertainties. The risks include the need to manage growth,the need to retain key personnel, the need to protect intellectual property, the availability of additional capital financing onterms acceptable to the Company and reliance on its collaboration with Pfizer Inc. (Pfizer). The Company’s current operatingassumptions and projections, which reflect management’s best estimate of future revenue and operating expenses, indicatethat anticipated operating expenditures through the end of 2019 can be met by available working capital; however, theCompany’s ability to meet its projections is subject to uncertainties, and there can be no assurance that the Company’scurrent projections will be accurate. If the Company’s cash requirements are more than projected, the Company may requireadditional financing. The type, timing and terms of financing selected by the Company, if required, will be dependent uponthe Company’s cash needs, the availability of financing sources and the prevailing conditions in the financial markets. Therecan be no assurance that such financing will be available to the Company at any given time or available on favorable terms.Management believes that the Company has access to capital resources through private investments of equity from itsexisting stockholders. However, it has not secured any commitment for new financing as of the date of this report, nor can itprovide any assurance that new financing will be available on commercially acceptable terms, if at all. If the Company isunable to secure additional capital, it will be required to curtail its operations, and if these measures fail, it may not be able tocontinue its business. Curtailment of operations would cause significant delays in the Company’s efforts to introduce itsproducts to market, which is critical to the realization of its business plan and the future operations of the Company.2. Summary of Significant Accounting PoliciesBasis of AccountingThe accompanying financial statements were prepared based on the accrual method of accounting in accordance withU.S. generally accepted accounting principles (GAAP).Segment InformationOperating segments are defined as components of an enterprise about which separate discrete information is availablefor evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate90 Table of Contentsresources and in assessing performance. The Company views its operations and manages its business in one segment, whichis the identification and development of glycomimetic compounds.Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of thefinancial statements and the reported amounts of revenues and expenses during the reporting periods. Although actual resultscould differ from those estimates, management does not believe that such differences would be material.Cash and Cash EquivalentsCash and cash equivalents consist of investment in money market funds with commercial banks and financialinstitutions. The Company considers all investments in highly liquid financial instruments with an original maturity of threemonths or less at the date of purchase to be cash equivalents. Cash equivalents are stated at amortized cost, plus accruedinterest, which approximates fair value.Fair Value MeasurementsThe Company’s financial instruments include cash and cash equivalents. The fair values of the financial instrumentsapproximated their carrying values at December 31, 2017 and 2016, due to their short-term maturities. The Companyaccounts for recurring and nonrecurring fair value measurements in accordance with ASC 820, Fair Value Measurements.ASC 820 defines fair value, establishes a fair value hierarchy for assets and liabilities measured at fair value, and requiresexpanded disclosures about fair value measurements. The ASC hierarchy ranks the quality of reliability of inputs, orassumptions, used in the determination of fair value, and requires assets and liabilities carried at fair value to be classifiedand disclosed in one of the following three categories:·Level 1—Fair value is determined by using unadjusted quoted prices that are available in active markets foridentical assets and liabilities.·Level 2—Fair value is determined by using inputs, other than Level 1 quoted prices, that are directly andindirectly observable. Inputs can include quoted prices for similar assets and liabilities in active markets or quotedprices for identical assets and liabilities in inactive markets. Related inputs can also include those used invaluation or other pricing models that can be corroborated by observable market data.·Level 3—Fair value is determined by inputs that are unobservable and not corroborated by market data. Use ofthese inputs involves significant and subjective judgments to be made by a reporting entity. In instances where thedetermination of the fair value measurement is based on inputs from different levels of fair value hierarchy, the fairvalue measurement will fall within the lowest level input that is significant to the fair value measurement in itsentirety.The Company periodically evaluates financial assets and liabilities subject to fair value measurements to determine theappropriate level at which to classify them each reporting period. This determination requires the Company to makesubjective judgments as to the significance of inputs used in determining fair value and where such inputs lie within the ASC820 hierarchy.The Company had no assets or liabilities that were measured using quoted prices for similar assets and liabilities orsignificant unobservable inputs (Level 2 and Level 3 assets and liabilities, respectively) as of December 31, 2017 and 2016.The carrying value of cash held in money market funds of approximately $121.9 million and $38.0 million as ofDecember 31, 2017 and 2016, respectively, is included in cash and cash equivalents and approximates market values basedon quoted market prices (Level 1 inputs). Concentration of Credit Risk Credit risk represents the risk that the Company would incur a loss if counterparties failed to perform pursuant to theterms of their agreements. Financial instruments that potentially expose the Company to concentrations of credit risk consistprimarily of cash and cash equivalents. Cash and cash equivalents consist of investment in money market funds91 Table of Contentswith major financial institutions in the United States. These deposits and funds may be redeemed upon demand and,therefore, bear minimal risk. The Company does not anticipate any losses on such balances.Property and EquipmentProperty and equipment are recorded at cost and depreciated on a straight-line basis over estimated useful lives rangingfrom three to seven years. Upon retirement or disposition of assets, the costs and related accumulated depreciation areremoved from the accounts and any resulting gain or loss is included in the results of operations. Expenditures for repairs andmaintenance are charged to operations as incurred; major replacements that extend the useful life are capitalized.Depreciation and amortization are computed using the straight-line method over the following estimated useful lives: ESTIMATED USEFUL LIVESFurniture and fixtures 7 yearsLaboratory equipment 5 yearsOffice equipment 5 yearsComputer equipment 5 yearsComputer software 3 yearsLeasehold improvements Shorter of lease term or useful life Impairment of Long-Lived AssetsThe Company periodically assesses the recoverability of the carrying value of its long-lived assets in accordance withthe provisions of ASC 360, Property, Plant, and Equipment. ASC 360 requires that long-lived assets and certain identifiableintangible assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amountof an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carryingamount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the carrying value exceedsthe sum of undiscounted cash flows, the Company then determines the fair value of the underlying asset. Any impairment tobe recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of theassets. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. As ofDecember 31, 2017 and 2016, the Company determined that there were no impaired assets and had no assets held for sale.Revenue RecognitionFrom time to time, the Company is awarded reimbursement contracts for services and development grant contracts withgovernment and non-government entities and philanthropic organizations. Under these contracts, the Company typically isreimbursed for the costs in connection with specific development activities. The Company recognizes revenue to the extentof costs incurred in connection with performance under such grant arrangements.The Company has entered into a collaborative research and development agreement with Pfizer. The agreement is inthe form of a license agreement. The agreement called for a nonrefundable up-front payment and milestone payments uponachieving significant milestone events. The agreement also contemplates royalty payments on future sales of an approvedproduct. There are no performance, cancellation, termination, or refund provisions in the arrangement that contain materialfinancial consequences to the Company.The primary deliverable under this arrangement is an exclusive worldwide license to the Company’s rivipanselcompound, but the arrangement also includes deliverables related to research and preclinical development activities to beperformed by the Company on Pfizer’s behalf.Collaborative research and development agreements can provide for one or more of up-front license fees, researchpayments, and milestone payments. Agreements with multiple components (deliverables or items) are evaluated according tothe provisions of ASC 605-25, Revenue Recognition—Multiple-Element Arrangements, to determine whether thedeliverables can be separated into more than one unit of accounting. An item can generally be considered a separate unit ofaccounting if all of the following criteria are met: (1) the delivered item(s) has value to the customer on a stand-alone basisand (2) if the arrangement includes a general right of return relative to the delivered item(s) then delivery or performance ofthe undelivered item(s) is considered probable and substantially in control of the Company.92 Table of ContentsItems that cannot be divided into separate units are combined with other units of accounting, as appropriate. Considerationreceived is allocated among the separate units based on selling price hierarchy. The selling price hierarchy for eachdeliverable is based on (i) vendor-specific objective evidence (VSOE), if available; (ii) third-party evidence (TPE) of sellingprice if VSOE is not available; or (iii) an estimated selling price, if neither VSOE nor third-party evidence is available.Management was not able to establish VSOE or TPE for separate unit deliverables, as the Company does not have a history ofentering such arrangements or selling the individual deliverables within such arrangements separately. In addition, there maybe significant differentiation in these arrangements, which indicates that comparable third-party pricing may not beavailable. Management determined that the selling price for the deliverables within the Pfizer collaboration agreementshould be determined using its best estimate of selling price. The process of determining the best estimate of selling priceinvolved significant judgment on the Company’s part and included consideration of multiple factors such as estimated directexpenses, other costs, and available clinical development data.Pursuant to ASC 605-25, each required deliverable under the Pfizer collaboration agreement is evaluated to determinewhether it qualifies as a separate unit of accounting. Factors considered in this determination include the researchcapabilities of Pfizer, the proprietary nature of the license and know-how, and the availability of the Company’sglycomimetics technology research expertise in the general marketplace. Based on all relevant facts and circumstances and,most significantly, on the proprietary nature of the Company’s technology and the related proprietary nature of theCompany’s research services, management concluded that stand-alone value does not exist for the license, and therefore, thelicense is not a separate unit of accounting under the contract and will be combined with the research and developmentservices (including participation on a joint steering committee).Pursuant to ASC 605-28, Revenue Recognition—Milestone Method, at the inception of agreements that includemilestone payments, the Company evaluates whether each milestone is substantive and at risk to both parties on the basis ofthe contingent nature of the milestone. This evaluation includes an assessment of whether (a) the consideration iscommensurate with either (1) the entity’s performance to achieve the milestone, or (2) the enhancement of the value of thedelivered item(s) as a result of a specific outcome resulting from the entity’s performance to achieve the milestone, (b) theconsideration relates solely to past performance and (c) the consideration is reasonable relative to all of the deliverables andpayment terms within the arrangement. In making this assessment, the Company evaluates factors such as scientific,regulatory, commercial and other risks that must be overcome to achieve the respective milestone, the level of effort andinvestment required to achieve the respective milestone and whether the milestone consideration is reasonable relative to alldeliverables and payment terms in the agreement. Non-refundable development and regulatory milestones that are expected to be achieved as a result of the Company’sefforts during the period of substantial involvement are recognized as revenue upon the achievement of the milestone,assuming all other revenue recognition criteria are met. Milestones that are not considered substantive because the Companydoes not contribute effort to the achievement of such milestones are generally achieved after the period of substantialinvolvement and are recognized as revenue upon achievement of the milestone, as there are no undelivered elementsremaining and no continuing performance obligation, assuming all other revenue recognition criteria are met. In May 2014,the Company recognized $15.0 million in revenue as a result of the first non-refundable milestone payment received fromPfizer. In June 2015, the Company recognized $20.0 million in revenue as a result of Pfizer dosing the first patient in thePhase 3 clinical trial of rivipansel, which triggered the second non-refundable milestone payment. There were no revenuemilestones met in the year ending December 31, 2017 and 2016.Accrued LiabilitiesThe Company is required to estimate accrued liabilities as part of the process of preparing its financial statements. Theestimation of accrued liabilities involves identifying services that have been performed on the Company’s behalf, and thenestimating the level of service performed and the associated cost incurred for such services as of each balance sheet date.Accrued liabilities include professional service fees, such as for lawyers and accountants, contract service fees, such as thoseunder contracts with clinical monitors, data management organizations and investigators in conjunction with clinical trials,and fees to contract manufacturers in conjunction with the production of clinical materials. Pursuant to the Company’sassessment of the services that have been performed, the Company recognizes these expenses as the services are provided.Such assessments include: (i) an evaluation by the project manager of the work that has been completed during the period;(ii) measurement of progress prepared internally and/or provided by the third-party service provider; (iii) analyses of data thatjustify the progress; and (iv) the Company’s judgment.93 Table of Contents Research and Development CostsExcept for payments made in advance of services, research and development costs are expensed as incurred. Forpayments made in advance, the Company recognizes research and development expense as the services are rendered.Research and development costs primarily consist of salaries and related expenses for personnel, laboratory supplies and rawmaterials, sponsored research, depreciation of laboratory facilities and leasehold improvements, and utilities costs related toresearch space. Other research and development expenses include fees paid to consultants and outside service providersincluding clinical research organizations and clinical manufacturing organizations.Stock-Based CompensationStock-based payments are accounted for in accordance with the provisions of ASC 718, Compensation—StockCompensation. The fair value of stock-based payments is estimated, on the date of grant, using the Black-Scholes-Mertonmodel. The resulting fair value is recognized ratably over the requisite service period, which is generally the vesting periodof the option.The Company has elected to use the Black-Scholes-Merton option pricing model to value any options granted. TheCompany will reconsider use of the Black-Scholes-Merton model if additional information becomes available in the futurethat indicates another model would be more appropriate or if grants issued in future periods have characteristics that preventtheir value from being reasonably estimated using this model.A discussion of management’s methodology for developing some of the assumptions used in the valuation modelfollows:Expected Dividend Yield—The Company has never declared or paid dividends and has no plans to do so in the foreseeablefuture.Expected Volatility—Volatility is a measure of the amount by which a financial variable such as share price has fluctuated(historical volatility) or is expected to fluctuate (expected volatility) during a period. Prior to the Company’s initial publicoffering, there was not a market for the Company’s shares. The Company utilizes the historical volatilities of a peer group(e.g., several public entities of similar size, complexity, and stage of development), along with the Company’s historicalvolatility since its initial public offering to determine its expected volatility.Risk-Free Interest Rate—This is the U.S. Treasury rate for the week of each option grant during the year, having a term thatmost closely resembles the expected life of the option.Expected Term—This is a period of time that the options granted are expected to remain unexercised. Options granted have amaximum term of 10 years. The Company estimates the expected life of the option term to be 6.25 years. The Company usesa simplified method to calculate the average expected term.Expected Forfeiture Rate—The forfeiture rate is the estimated percentage of options granted that is expected to be forfeitedor canceled on an annual basis before becoming fully vested. Effective with the adoption of ASU No. 2016-09 on January 1,2017, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, theCompany has elected to account for forfeitures as they occur. Income TaxesThe Company accounts for income taxes using the asset and liability method in accordance with ASC 740, IncomeTaxes. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases ofassets and liabilities and the financial reporting amounts at each year-end based on enacted tax laws and statutory tax ratesapplicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is establishedwhen necessary to reduce deferred tax assets to the amount expected to be realized.The Company accounts for uncertain tax positions pursuant to ASC 740. Financial statement recognition of a taxposition taken or expected to be taken in a tax return is determined based on a more-likely-than-not threshold of that taxposition being sustained. If the tax position meets this threshold, the benefit to be recognized is measured as the tax94 Table of Contentsbenefit having the highest likelihood of being realized upon ultimate settlement with the taxing authority. The Companyrecognizes interest accrued related to unrecognized tax benefits and penalties in the provision for income taxes.Comprehensive LossComprehensive loss comprises net loss and other changes in equity that are excluded from net loss. For the years endedDecember 31, 2017, 2016 and 2015, the Company’s net loss equals comprehensive loss and, accordingly, no additionaldisclosure is presented.Recently Issued Accounting Standards In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvementsto Employee Share-Based Payment Accounting. This ASU included provisions intended to simplify various aspects related tohow share-based payments are accounted for and presented in financial statements including the income tax effects of share-based payments, minimum statutory withholding requirements and forfeitures. The new guidance required all income taxeffects of awards to be recognized in the income statement when the awards vest or are settled. It also allows an employer torepurchase more of an employee’s shares than the current standard for tax withholding purposes without triggering liabilityaccounting and to make a policy election to account for forfeitures as they occur. The Company adopted the provisions ofASU 2016-09 on January 1, 2017. The Company has elected to account for forfeitures as they occur. The Company hasapplied this change using a modified retrospective method through a cumulative-effect adjustment of $19,727 toaccumulated deficit. Additionally, the Company recognized deferred tax assets of $98,767 for the excess tax benefits thatarose directly from tax deductions related to equity compensation greater than the amounts recognized for financial reportingand also recognized an increase of an equal amount in the valuation allowance against those deferred tax assets. TheCompany has adopted the additional provisions in the standard and has determined these provisions do not have a materialimpact on the financial statements. On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), requiringan entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or servicesto customers. The updated standard replaces most existing revenue recognition guidance in GAAP and permits the use ofeither the retrospective or cumulative effect transition method. In 2015 and 2016, the FASB issued additional ASUs relatedto Topic 606 that delayed the effective date of the guidance and clarified various aspects of the new revenue guidance,including principal versus agent considerations, identifying performance obligations, and licensing, and they include otherimprovements and practical expedients. The Company adopted this new standard on January 1, 2018 using the fullretrospective transition method. Under this method, the Company is required to revise its financial statements, if applicable, for the years endedDecember 31, 2017 and 2016, and applicable interim periods within those years, as if Topic 606 had been effective for thoseperiods in the year the new standard is adopted. As the Company has concluded that there are no impacts to reported revenuefrom the adoption of this new standard, no historical amounts will be revised when reporting our year ended December 31,2018 results or interim periods within that year. Impact of Adoption The Company has evaluated the Pfizer Agreement to determine the impact of the new revenue standard on the upfrontand milestone payments within the Pfizer Agreement and has determined that the transition to the new revenue standard willhave no impact on the financial statements for prior reporting periods. There will be no revised financial line items underTopic 606 for prior year comparative financial statements. For further discussion of the adoption of this standard, see Note10, “Research and License Agreements”.Accounting Standards Not Yet AdoptedIn February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes existing guidance onaccounting for leases in Leases (Topic 840) and generally requires all leases, including operating leases, to be recognized inthe statement of financial position as right-of-use assets and lease liabilities by lessees. The provisions of ASU 2016-02 are tobe applied using a modified retrospective approach and are effective for reporting periods beginning after95 Table of ContentsDecember 15, 2018; early adoption is permitted. The Company is currently evaluating the effect that this ASU will have onthe financial statements.With the exception of the new standards discussed above, there have been no new accounting pronouncements thathave significance, or potential significance, to the Company’s financial statements. 3. Net Loss Per Share of Common StockBasic net loss per common share is determined by dividing net loss by the weighted-average number of common sharesoutstanding during the period, without consideration of common stock equivalents. Diluted net income per share iscomputed by dividing net income by the weighted-average number of common stock equivalents outstanding for the period.The treasury stock method was used to determine the dilutive effect of the Company’s stock option grants, restricted stockunits and warrants.The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31,2017, 2016 and 2015: Year Ended December 31, 2017 2016 2015 Net loss $(33,281,068) $(31,809,838) $(12,769,498) Basic and diluted net loss per common share $(1.13) $(1.50) $(0.67) Basic and diluted weighted average common shares outstanding 29,395,756 21,256,312 19,010,587 The following potentially dilutive securities outstanding at December 31, 2017, 2016 and 2015 have been excludedfrom the computation of diluted weighted average shares outstanding, as they would be anti-dilutive: Year Ended December 31, 2017 2016 2015 Warrants 553,868 553,868 578,687 Stock options and restricted stock units 3,399,124 2,817,674 2,235,775 4. Prepaid Expenses and Other Current AssetsThe following is a summary of the Company’s prepaid expenses and other current assets at December 31: 2017 2016 Prepaid research and development expenses $2,941,196 $59,004 Other prepaid expenses 251,733 140,191 Other receivables 101,955 268,659 Deposits — 10,649 Prepaid expenses and other current assets $3,294,884 $478,503 96 Table of Contents5. Property and EquipmentProperty and equipment, net consisted of the following at December 31: 2017 2016 Furniture and fixtures $314,024 $262,135 Laboratory equipment 1,325,667 1,130,180 Office equipment 11,085 6,610 Computer equipment 192,430 169,423 Leasehold improvements 573,165 36,128 Construction in progress — 508,417 Property and equipment 2,416,371 2,112,893 Less accumulated depreciation (1,309,472) (1,056,561) Property and equipment, net $1,106,899 $1,056,332 Depreciation of property and equipment totaled $263,541, $190,540 and $191,484 for the years ended December 31,2017, 2016 and 2015, respectively.6. Accrued ExpensesThe following is a summary of the Company’s accrued expenses at December 31: 2017 2016 Accrued research and development expenses $2,702,445 $2,513,243 Accrued consulting and other professional fees 227,811 148,579 Other accrued expenses 304,421 315,002 Accrued employee benefits 331,930 290,547 Accrued expenses $3,566,607 $3,267,371 7. Operating Leases The Company leases office and research space in Rockville, Maryland under an operating lease with a term throughOctober 31, 2023 (as amended to date, the Lease) that is subject to annual rent increases. The Company has the right tosublease or assign all or a portion of the premises, subject to the conditions set forth in the Lease. The Lease may beterminated early by either the landlord or the Company in certain circumstances. In connection with the Lease, the Companyreceived rent abatement as a lease incentive. The annual rent increases and rent abatement have been recognized as deferredrent that is being adjusted on a straight-line basis over the term of the Lease. In March 2016, the Company amended the Lease (the Lease Amendment) to lease additional space beginning on June1, 2016. In addition to the other terms of the Lease, the Lease Amendment provided for a tenant improvement allowancereflected in the Company’s financial statements as an increase in capitalized leasehold improvements as incurred and anincrease in deferred rent. In May 2016, the Company also paid a security deposit of $52,320 to be held until the expiration ortermination of the Company’s obligations under the Lease. The term of the Lease Amendment for the additional spacecontinues through October 31, 2023, the same date as for the premises originally leased under the Lease, subject to theCompany’s renewal option set forth in the Lease. The Company also has a one-time option to terminate the Lease effective asof October 31, 2020. Deferred rent related to the Lease was $785,031 and $822,130 at December 31, 2017 and December 31, 2016,respectively. Total rent expense under the Company’s leases was $890,170, $784,739 and $595,497 for the years endedDecember 31, 2017, 2016 and 2015, respectively.97 Table of ContentsThe following table presents the future minimum lease payments as of December 31, 2017 under the Lease: YEAR AMOUNT 2018 $965,368 2019 989,502 2020 1,014,239 2021 1,039,595 2022 1,065,585 After 2022 906,669 Total $5,980,958 8. Stockholders’ EquityCommon Stock At-The-Market Equity Offerings On March 1, 2016, the Company entered into an at-the-market sales agreement with Cowen and Company, LLC to sellthe Company’s securities under a shelf registration statement filed in March 2015. As of December 31, 2016, the Companyhad issued and sold 668,791 shares of common stock under the at-the-market sales agreement. The shares were sold at aweighted average price per share of $6.336, for aggregate net proceeds of $3.9 million, after deducting commissions andoffering expenses. During the period from January 1, 2017 through May 23, 2017, the Company issued and sold anadditional 1,388,647 shares of common stock under the at-the-market sales agreement. The shares were sold at a weightedaverage price per share of $5.55, for aggregate net proceeds of $7.4 million, after deducting commissions and offeringexpenses. The at-the market sales agreement was terminated on May 23, 2017. On September 28, 2017, the Company entered into a new at-the-market sales agreement with Cowen and Company,LLC to sell the Company’s securities under a shelf registration statement filed in September 2017. As of December 31, 2017,the Company had issued and sold 1,600,000 shares of common stock under the at-the-market sales agreement. The shareswere sold at a weighted average price per share of $12.50, for aggregate net proceeds of $19.3 million, after deductingcommissions and offering expenses. As of December 31, 2017, $80.0 million remained available to be sold under the terms ofthe September 2017 at-the-market sales agreement. Public Offerings of Common StockIn June 2016, the Company completed a public offering in which the Company sold 3,476,793 shares of its commonstock at a price of $6.10 per share. The Company received net proceeds of $19.7 million from this offering, after deductingunderwriting discounts, commissions and other offering expenses. In May 2017, the Company completed a public offering in which the Company sold 8,050,000 shares of its commonstock at a price to the public of $11.50 per share. The Company received net proceeds of $86.8 million from this offering,after deducting underwriting discounts, commissions and other offering expenses.Warrants to Acquire Company StockThe following common stock warrants were outstanding as of each of December 31, 2017 and 2016: Number of Shares Exercise Underlying Outstanding Price Expiration Warrants Per Share Date 236,632 $0.33 July 18, 2018 301,986 0.33 January 16, 2019 15,250 0.33 January 30, 2019 98 Table of ContentsFor the year ended December 31, 2017, no warrants were exercised or expired. For the year ended December 31, 2016, atotal of 23,275 warrants were exercised at a weighted average exercise price of $0.33 per share. For the year ended December31, 2015, a total of 11,908 warrants were exercised at a weighted average exercise price of $0.33 per share. For the year endedDecember 31, 2016, a total of 1,544 warrants expired. No warrants expired during the year ended December 31, 2015.2003 Stock Incentive PlanThe 2003 Stock Incentive Plan (the 2003 Plan) provided for the grant of incentives and nonqualified stock options andrestricted stock awards. The exercise price for incentive stock options must be at least equal to the fair value of the commonstock on the grant date. Unless otherwise stated in a stock option agreement, 25% of the shares subject to an option grant willvest upon the first anniversary of the vesting start date and thereafter at the rate of one forty-eighth of the option shares permonth as of the first day of each month after the first anniversary. Upon termination of employment by reasons other thandeath, cause, or disability, any vested options shall terminate 60 days after the termination date. Stock options terminate 10years from the date of grant. The 2003 Plan expired on May 21, 2013.A summary of the Company’s stock option activity under the 2003 Plan for the year ended December 31, 2017 is asfollows: Weighted-Average Remaining Aggregate Outstanding Weighted-Average Contractual Term Intrinsic Value Options Exercise Price (Years) (In thousands) Outstanding as of December 31, 2016 729,819 $1.26 3.2 Options exercised (16,608) 1.65 Options forfeited — — Outstanding as of December 31, 2017 713,211 1.25 2.2 $11,086 Vested as of December 31, 2017 713,211 1.25 2.2 $11,086 Exercisable as of December 31, 2017 713,211 1.25 2.2 $11,086 During 2017, 2016 and 2015 the Company issued 16,608, 28,368 and 99,029 shares of common stock, respectively, inconjunction with exercises of stock options granted under the 2003 Plan. The Company received cash proceeds from theexercise of these stock options of approximately to $27,357, $44,771 and $114,124 during 2017, 2016 and 2015,respectively. Total intrinsic value of the options exercised during the years ended December 31, 2017, 2016 and 2015 was$103,638, $97,707 and $667,258, respectively.As of December 31, 2017, the options under the 2003 Plan were fully expensed. The total fair value of shares vested inthe years ended December 31, 2017, 2016 and 2015, was $1,573, $16,024 and $50,310, respectively. There were no optionsgranted from this plan in 2017, 2016 or 2015. 2013 Equity Incentive PlanThe Company’s board of directors adopted, and its stockholders approved, its 2013 Equity Incentive Plan (the 2013Plan) effective on January 9, 2014. The 2013 Plan provides for the grant of incentive stock options within the meaning ofSection 422 of the Internal Revenue Code (the Code), to the Company’s employees and its parent and subsidiarycorporations’ employees, and for the grant of nonstatutory stock options, restricted stock awards, restricted stock unit awards,stock appreciation rights, performance stock awards and other forms of stock compensation to its employees, includingofficers, consultants and directors. The 2013 Plan also provides for the grant of performance cash awards to the Company’semployees, consultants and directors. Unless otherwise stated in a stock option agreement, 25% of the shares subject to anoption grant will typically vest upon the first anniversary of the vesting start date and thereafter at the rate of one forty-eighthof the option shares per month as of the first day of each month after the first anniversary. Upon termination of employmentby reasons other than death, cause, or disability, any vested options shall terminate 90 days after the termination date, unlessotherwise set forth in a stock option agreement. Stock options generally terminate 10 years from the date of grant.99 Table of ContentsAuthorized SharesThe maximum number of shares of common stock that may be issued under the 2013 Plan was 1,000,000 shares, plusany shares subject to stock options or similar awards granted under the 2003 Plan that expire or terminate without havingbeen exercised in full or are forfeited to or repurchased by the Company. The number of shares of common stock reserved forissuance under the 2013 Plan will automatically increase on January 1 of each year, beginning on January 1, 2015 andending on January 1, 2023, by 3% of the total number of shares of common stock outstanding on December 31 of thepreceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors. Themaximum number of shares that may be issued pursuant to exercise of incentive stock options under the 2013 Plan is20,000,000. As of January 1, 2018, the number of shares of common stock that may be issued under the 2013 Plan wasautomatically increased by 1,030,793 shares, representing 3% of the total number of shares of common stock outstanding onJanuary 1, 2017, increasing the number of shares of common stock available for issuance under the 2013 Plan to 3,867,994shares.Shares issued under the 2013 Plan may be authorized but unissued or reacquired shares of common stock. Sharessubject to stock awards granted under the 2013 Plan that expire or terminate without being exercised in full, or that are paidout in cash rather than in shares, will not reduce the number of shares available for issuance under the 2013 Plan.Additionally, shares issued pursuant to stock awards under the 2013 Plan that the Company repurchases or that are forfeited,as well as shares reacquired by the Company as consideration for the exercise or purchase price of a stock award or to satisfytax withholding obligations related to a stock award, will become available for future grant under the 2013 Plan.A summary of the Company’s stock option activity under the 2013 Plan for the year ended December 31, 2017 is asfollows: WEIGHTED- WEIGHTED- AVERAGE AGGREGATE AVERAGE REMAINING INTRINSIC OUTSTANDING EXERCISE CONTRACTUAL VALUE (IN OPTIONS PRICE TERM(YEARS) THOUSANDS) Outstanding as of December 31, 2016 2,066,105 $7.41 7.9 Options granted 674,738 7.03 Options exercised (54,521) 6.35 Options forfeited (22,159) 7.35 Outstanding as of December 31, 2017 2,664,163 7.34 7.4 $25,091 Vested or expected to vest as ofDecember 31, 2017 2,664,163 7.34 7.4 $25,091 Exercisable as of December 31, 2017 1,569,935 7.81 6.5 $14,079 The weighted-average fair value of the options granted during the year of December 31, 2017, 2016 and 2015 was$4.76, $3.39 and $5.08 per share, respectively, applying the Black-Scholes-Merton option pricing model utilizing thefollowing weighted-average assumptions: 2017 2016 2015Expected term 6.25 years 6.25 years 6.25 yearsExpected volatility 75.20% 68.98% 80.76%Risk-free interest rate 2.08% 1.70% 1.70%Expected dividend yield 0% 0% 0%As of December 31, 2017, there was $3,935,996 of total unrecognized compensation expense related to unvestedoptions that will be recognized over a weighted-average period of approximately 2.2 years. The total fair value of sharesvested in the years ended December 31, 2017, December 31, 2016 and December 31, 2015 was $3,506,568, $3,053,086 and$2,668,712, respectively. During the years ended December 31, 2017 and December 31, 2016, the Company received cash of$346,019 and $27,825, respectively and issued 54,521 and 3,500 shares of common stock, respectively, in conjunction withexercises of stock options granted under the 2013 Plan. The intrinsic value of the options exercised for the years endedDecember 31, 2017 and 2016 was $385,701 and $2,275, respectively. There were no option exercises under the 2013 Planfor the year ended December 31, 2015.100 Table of ContentsAn RSU is a stock award that entitles the holder to receive shares of the Company’s common stock as the award vests.The fair value of each RSU is based on the closing price of the Company’s stock on the date of grant. The Company hasgranted RSUs with service conditions (service RSUs) that vest in three equal annual installments provided that the employeeremains employed with the Company. As of December 31, 2017, $23,380 of unrecognized compensation costs related tounvested service.The following is a summary of RSU activity for the 2013 Plan for the year ended December 31, 2017: Weighted-Average Number Grant Date of Shares Fair Value Unvested at December 31, 2016 16,916 $5.04 Granted — — Forfeited — — Vested 7,249 5.61 Unvested at December 31, 2017 9,667 4.61 Stock-based compensation expense was classified as follows on the statement of operations for the years endedDecember 31: 2017 2016 2015Research and development expense $1,280,909 $1,033,005 $802,329General and administrative expense 2,479,893 1,931,762 1,521,274Total stock-based compensation expense $3,760,802 $2,964,767 $2,323,6039. Income TaxesThe components of the gross deferred tax asset and related valuation allowance at December 31 were as follows: 2017 2016 Deferred tax assets: Net operating loss carryforward $30,813,509 $34,451,814 Capitalized start-up costs 1,695,688 2,708,479 Patent amortization 135,358 216,203 Research and orphan drug credits 21,293,509 14,988,522 Deferred rent 71,938 123,744 Deferred compensation 2,274,885 2,107,964 Other 69,906 70,511 Total gross deferred tax assets 56,354,793 54,667,237 Valuation allowance (56,354,793) (54,667,237) Deferred tax assets — — Deferred tax liabilities: Depreciation — — Total deferred tax liabilities — — Net deferred tax assets $ — $ — Based on the Company’s operating history and management’s expectation regarding future profitability, managementbelieves the realization of the Company’s deferred tax assets does not meet the more-likely-than-not criteria under ASC 740,Income Taxes. Accordingly, a full valuation allowance has been established as of December 31, 2017 and 2016.On December 22, 2017, the Tax Cuts and Jobs Acts (the “TCJA”) was enacted into law. The TCJA contains several keytax provisions including the reduction of the corporate income tax rate from 35% to 21% effective January 1, 2018, as well asa variety of other changes, including the limitation of the tax deductibility of interest expense, acceleration of expensing ofcertain business assets and reductions in the amount of executive pay that can qualify as a101 Table of Contentstax deduction. ASC 740 requires the Company to recognize the effect of the tax law changes in the period of enactment. TheCompany re-measured certain of its U.S. deferred tax assets and liabilities, based on the rates at which they are expected toreverse in the future. The tax benefit recorded related to the re-measurement of the deferred tax balance was $15.2 million,which was offset by the related valuation allowance. The SEC staff has issued Staff Accounting Bulletin (“SAB”) 118, whichwill allow the Company to record provisional amounts during a measurement period which is similar to the measurementperiod used when accounting for business combinations. While the company has substantially completed the provisionalanalysis of the income tax effects of this recent tax reform legislation, and recorded a reasonable estimate of such effects, theultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, furtherrefinement of our calculations, additional analysis, changes in assumptions, and actions we may take as a result of the TCJA.As of December 31, 2017, the Company had $112.0 million of U.S. Federal and state net operating losses, $8.0 millionof research and development tax credits and $13.3 million of orphan drug tax credits available to carry forward. A portion ofthe net operating loss carryforwards will begin to expire in 2026, the research and development tax credits in 2023 and theorphan drug tax credit in 2033.The Company’s tax attributes, including net operating losses and credits, are subject to any ownership changes asdefined under Internal Revenue Code Sections 382 and 383. A change in ownership could affect the Company’s ability toutilize its net operating losses and credits. As of December 31, 2017, the Company does not believe that an ownershipchange has occurred. Any future ownership changes may cause a limitation on the Company’s ability to utilize existing taxattributes.The Company files income tax returns in the U.S. federal jurisdiction and in the State of Maryland. The Company’sfederal income tax returns for tax years 2003 and after remain subject to examination by the U.S. Internal Revenue Service.The Company’s Maryland income tax returns for the tax years 2006 and thereafter remain subject to examination by theComptroller of Maryland. In addition, all of the net operating losses, research and development tax credit and orphan drugcredit carryforwards that may be used in future years are still subject to adjustment.The Company did not have unrecognized tax benefits as of December 31, 2017 and 2016, and does not anticipate thisto change significantly over the next 12 months. The Company will recognize interest and penalties accrued on anyunrecognized tax benefits as a component of income tax expense. Reconciliations between the statutory federal income taxrate and the effective income tax rate of income tax expense is as follows as of December 31: 2017 2016 2015 U.S. Federal statutory tax rate 34.0% 34.0% 34.0%State taxes 4.4 4.6 3.7 Research credit 1.3 1.0 5.6 Orphan drug credit 11.5 9.0 11.5 Other 0.3 — — Stock-based compensation (0.7) (0.7) (1.8) Change in valuation allowance (5.1) (47.9) (53.0) Effective change due to corporate tax ratereduction (45.7) — — Provision for income taxes —% —% —%10. Research and License AgreementsIn February 2004, the Company entered into a research services agreement (the Research Agreement) with theUniversity of Basel (the University) for biological evaluation of selectin antagonists. Certain patents covering the rivipanselcompound remain subject to provisions of the Research Agreement. Under the terms of the Research Agreement, theCompany will owe a 10% payment to the University for all future milestone and royalty payments received from Pfizer withrespect to rivipansel. A milestone license fee of $2.0 million was recorded in the year ended December 31, 2015 for thepayment due to the University of Basel representing 10% of the $20.0 million non-refundable milestone payment that theCompany received from Pfizer in August 2015. The accrued license and milestone fee of $2.0 million was paid in February2016. There were no payments recorded for the years ended December 31, 2017 or 2016.102 Table of ContentsIn October 2011, the Company and Pfizer entered into a licensing agreement (the Pfizer Agreement) that providesPfizer an exclusive worldwide license to rivipansel for vaso-occlusive crisis associated with sickle cell disease and for otherdiseases for which the drug candidate may be developed. The Company was responsible for completion of the Phase 2 trial,after which Pfizer assumed all further development and commercialization responsibilities. Upon execution of the PfizerAgreement, the Company received an up-front payment of $22.5 million. The Pfizer Agreement also provides for potentialmilestone payments of up to $115.0 million upon the achievement of specified development milestones, including thedosing of the first patients in Phase 3 clinical trials for up to two indications and the first commercial sale of a licensedproduct in the United States and selected European countries for up to two indications; potential milestone payments of upto $70.0 million upon the achievement of specified regulatory milestones, including the acceptance of the Company’s filingsfor regulatory approval by regulatory authorities in the United States and Europe for up to two indications; and potentialmilestone payments of up to $135.0 million upon the achievement of specified levels of annual net sales of licensedproducts. Pfizer has the right to terminate the Pfizer Agreement by giving prior written notice.The Company has determined that each potential future clinical, development and regulatory milestone is substantive.Although sales-based milestones are not considered substantive, they are still recognized upon achievement of the milestone(assuming all other revenue recognition criteria have been met) because there are no undelivered elements that wouldpreclude revenue recognition at that time. The Company is also eligible to receive royalties on future sales contingent uponannual net sales thresholds. In addition, the Company and Pfizer have formed a joint steering committee, or JSC, that willoversee and coordinate activities as set forth in the research program. The $22.5 million up-front payment was recognizedover a period of 1.5 years. In May 2014, the Company received a non-refundable payment of $15.0 million from Pfizer as apartial milestone payment owed to the Company upon the dosing of the first patient in the Phase 3 clinical trial. The dosingof the first patient in a Phase 3 clinical trial of rivipansel in June 2015 triggered the remaining $20.0 million of the scheduledmilestone payment under the Pfizer Agreement. During the year ended December 31, 2015, the Company recorded revenue of$20.0 million pursuant to the Pfizer Agreement in the Company’s statement of operations. There was no revenue recognizedunder the Pfizer Agreement for the years ended December 31, 2017 and 2016. The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty,Pfizer, is a customer. The Company identified the following performance obligations under the contract: (1) an exclusiveworldwide license to rivipansel for vaso-occlusive crisis associated with sickle cell disease and for other diseases for whichthe drug candidate may be developed; and (2) research and development (R&D) services to develop the rivipansel compoundfor commercial use related to the Phase 2 clinical trial and delivery of data to Pfizer. In addition to the rivipansel license andR&D services, management also considered whether the Company’s participation in the JSC constituted a promise. The JSCwas formed solely for communication purposes between Pfizer and the Company relating to Pfizer’s progress in furtherdeveloping rivipansel for commercial use. The Company’s involvement in the JSC is limited to attending the JSC meetingson a semi-annual basis to receive progress updates from Pfizer; Pfizer is responsible for calling and organizing the meetings.Given the minimal level of involvement by the Company, participation in the JSC is not considered a significant aspect ofthe arrangement and the related costs, such as employee time, are not material. Therefore, management views the Company’sparticipation in JSC as administrative only and did not further evaluate its participation in the JSC in identifying theperformance obligations in the contract. Under the Agreement, in order to evaluate the appropriate transaction price, the Company determined that the up-frontamount constituted the entirety of the consideration to be included in the transaction price and to be allocated to theperformance obligations based on the Company’s best estimate of their relative stand-alone selling prices. The transactionprice of the upfront fee is equal to the $22.5 million received. The fixed upfront consideration is recognized under ASC 606based on when control of the combined performance obligation is transferred to the customer, which corresponds with theservice period (through March 2013). None of the clinical, regulatory milestones has been included in the transaction price,as all milestone amounts were fully constrained. Event driven milestones are a form of variable consideration as the paymentsare variable based on the occurrence of future events. As part of its evaluation of the constraint, the Company considerednumerous factors, including that receipt of the milestones is outside the control of the Company and contingent upon successin future clinical trials and the licensee’s efforts. Recognition of event driven milestones should be recognized when thevariable consideration is no longer constrained. There are no changes in accounting necessary for the $15.0 millionmilestone payment recognized in May 2014 or the $20.0 million milestone payment recognized in June 2015 as a result ofPfizer dosing the first patient in the Phase 3 clinical trial of rivipansel. Future event milestones will be recognized when theconstraint no longer applies.103 Table of Contents Any consideration related to sales-based milestones (including royalties) will be recognized when the related salesoccur as they were determined to relate predominantly to the license granted to Pfizer and therefore have also been excludedfrom the transaction price. The Company will re-evaluate the transaction price in each reporting period and as uncertainevents are resolved or other changes in circumstances occur. In evaluation of the Agreement, there were no significantfinancing components identified, no non-cash consideration was paid by Pfizer and no consideration was paid by theCompany to Pfizer as part of the arrangement.11. Employee Benefit PlanThe Company has a defined contribution plan under the Internal Revenue Code Section 401(k). This plan coverssubstantially all employees who meet minimum age and service requirements and allows participants to defer a portion oftheir annual compensation on a pre-tax basis. For the years ended December 31, 2017 and 2016, the Company made adiscretionary match of 50% up to the first 3% of employee contributions. All matching contributions have been paid by theCompany. The Company’s matching contributions vest in full at the employee’s third anniversary of employment and allemployer contributions thereafter vest immediately. The total Company matching contributions were approximately$88,000 and $79,000 for the years ended December 31, 2017 and 2016, respectively. There were no Company matchingcontributions for the year ended December 31, 2015.12. Quarterly Financial Information (Unaudited)Summarized quarterly financial information for each of the years ended December 31, 2017 and 2016 are as follows: Quarter Ended December 31, September 30, June 30, March 31, 2017 2017 2017 2017 Revenue $ — $ — $ — $ — Net loss $(9,257,858) $(7,950,101) $(8,141,796) $(7,931,313) Loss per share—basic and diluted $(0.27) $(0.24) $(0.30) $(0.34) Quarter Ended December 31, September 30, June 30, March 31, 2016 2016 2016 2016 Revenue $ — $18,500 $ — $ — Net loss $(8,328,597) $(7,854,693) $(8,071,570) $(7,554,978) Loss per share—basic and diluted $(0.36) $(0.34) $(0.41) $(0.40) 104 Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the following Registration Statements:(1)Registration Statement (Form S-8 No. 333-193317) pertaining to the 2003 Stock Incentive Plan,as amended, 2013 Equity Incentive Plan and 2013 Employee Stock Purchase Plan ofGlycoMimetics, Inc.,(2)Registration Statement (Form S-8 No. 333-206166) pertaining to the 2013 Equity Incentive Planand 2013 Employee Stock Purchase Plan of GlycoMimetics, Inc.,(3)Registration Statement (Form S-8 No. 333-209814) pertaining to the 2013 Equity Incentive Planand 2013 Employee Stock Purchase Plan of GlycoMimetics, Inc.,(4)Registration Statement (Form S-8 No. 333-216366) pertaining to the 2013 Equity Incentive Planand 2013 Employee Stock Purchase Plan of GlycoMimetics, Inc., and(5)Registration Statement (Form S-3 No. 333-220697) of GlycoMimetics, Inc. of our report dated March 6, 2018, with respect to the financial statements of GlycoMimetics, Inc.included in this Annual Report (Form 10-K) of GlycoMimetics, Inc. for the year ended December 31,2017. /s/ Ernst & Young LLPTysons, VirginiaMarch 6, 2018 EXHIBIT 31.1CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Rachel K. King, certify that:1.I have reviewed this annual report on Form 10-K of GlycoMimetics, Inc. (the “registrant”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of,and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and 15d-15(e)) and internalcontrol over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered 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 occurredduring the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annualreport) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control overfinancial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant rolein the registrant’s internal control over financial reporting. Date: March 6, 2018 /s/ Rachel K. King Rachel K. King President & Chief Executive Officer (principal executive officer) EXHIBIT 31.2CERTIFICATION OF PRINCIPAL FINANCIAL OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Brian M. Hahn, certify that:1.I have reviewed this annual report on Form 10-K of GlycoMimetics, Inc. (the “registrant”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of,and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and 15d-15(e)) and internalcontrol over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered 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 occurredduring the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annualreport) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control overfinancial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant rolein the registrant’s internal control over financial reporting. Date: March 6, 2018 /s/ Brian M. Hahn Brian M. Hahn Chief Financial Officer (principal financial officer) EXHIBIT 32.1CERTIFICATIONS OFPRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the“Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Rachel K.King, Chief Executive Officer of GlycoMimetics, Inc. (the “Company”), and Brian M. Hahn, Chief Financial Officer ofthe Company, each hereby certifies that, to the best of his or her knowledge:1.The Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “Annual Report”),to which this Certification is attached as Exhibit 32.1, fully complies with the requirements of Section 13(a)or Section 15(d) of the Exchange Act, and2.The information contained in the Annual Report fairly presents, in all material respects, the financialcondition of the Company as of the end of the period covered by the Annual Report and results ofoperations of the Company for the periods covered by the Annual Report.In Witness Whereof, the undersigned have set their hands hereto as of the 6 day of March, 2018. /s/ Rachel K. King /s/ Brian M. Hahn Rachel K. King Brian M. HahnPresident & Chief Executive Officer Chief Financial Officer *This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities andExchange Commission and is not to be incorporated by reference into any filing of GlycoMimetics, Inc. under theSecurities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before orafter the date of the Form 10-K), irrespective of any general incorporation language contained in such filing. th

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